India to grow by 6.5% in 2025 despite global recession risks, says UNCTAD

The Indian economy is projected to grow by 6.5% in 2025, supported by robust public investment and a more accommodative monetary policy, according to a new report from the United Nations Conference on Trade and Development (UNCTAD). This comes even as the global economy trends towards recession, driven by growing trade conflicts and widespread uncertainty.

In its latest publication, "Trade and Development Foresights 2025 - Under pressure: Uncertainty reshapes global economic prospects", UNCTAD forecasts global growth will slow to just 2.3% next year. The report, released on April 16, warns of intensifying trade policy shocks, increased financial market volatility and rising global uncertainty.

India remains the fastest-growing major economy

Despite a slight dip from the 6.9% growth recorded in 2024, India is still expected to outpace other major economies in 2025. UNCTAD states, "estimates that India will grow by 6.5% in 2025 on the back of continued robust public spending and ongoing monetary easing. The decision of the central bank to cut the interest rate by 25 basis points for the first time in five years in early February will support household consumption as well as provide a boost to private investment plans."

The broader South Asia region is also projected to expand, albeit at a slower pace of 5.6%. UNCTAD notes that as inflation declines across the region, space is opening up for further monetary easing. However, the report warns that "food price volatility will remain a risk and complex debt dynamics will continue to burden economies such as Bangladesh, Pakistan and Sri Lanka."

Global slowdown threatens developing economies

The report underlines that the world economy is being pulled towards a recession, largely due to rising trade tensions and persistent global uncertainty. According to UNCTAD, recent tariff actions are unsettling supply chains and reducing predictability in trade relationships. "Trade policy uncertainty is at a historical high," the report notes, "and this is already translating into delayed investment decisions and reduced hiring."

While all nations are expected to feel the effects of the global downturn, developing economies and particularly low-income countries are likely to be hardest hit. UNCTAD highlights the risks of a "perfect storm" marked by worsening external financial pressures, unmanageable debt levels, and weakening domestic growth.

South-South trade offers hope amid challenges

Despite the challenges, the report highlights South-South trade as a potential source of resilience. Currently accounting for roughly a third of all global trade, this economic integration among developing countries presents growth opportunities in an otherwise troubled global environment. "The potential of South-South economic integration offers opportunities for many developing countries," the report observed.

UNCTAD stresses the need for renewed cooperation. It urges greater international dialogue, reinforced regional partnerships, and coordinated economic responses. "Coordinated action will be essential to restore confidence and keep development on track," the report said.