Despite global economic headwinds, India continues to lead as the fastest-growing large economy, with a projected growth rate of 6.3% for the current fiscal year, according to the United Nations' latest World Economic Situation and Prospects (WESP) mid-year update.
The UN noted that India’s growth is being driven by strong private consumption and public investment, although the projection for 2025 has been revised slightly downward from the earlier 6.6% estimate made in January. Growth is expected to edge up to 6.4% in 2026, still marginally lower than January's forecast of 6.7 per cent.
“In a time when global economic prospects are dimming, India’s steady growth remains a bright spot,” said Ingo Pitterle, Senior Economic Affairs Officer at the UN, during the report's release on Thursday.
The global economic environment, by contrast, is facing what the UN describes as a “precarious moment,” marked by increasing trade tensions and policy uncertainties. The global economy is now expected to expand by just 2.4 per cent this year.
Shantanu Mukherjee, Director of the UN’s Economic Analysis and Policy Division, highlighted the shift in expectations since January. “We were looking at two years of stable, albeit modest, growth. But since then, the outlook has weakened considerably,” he said.
India’s growth continues to outpace other major economies, with China projected to grow at 4.6%, the United States at 1.6%, the European Union at 1%, Japan at 0.7%, and Germany expected to contract slightly by -0.1%.
According to the WESP report, India's economic momentum is being supported by resilient domestic demand, substantial public infrastructure investments, and solid growth in services exports.
On the inflation front, the outlook remains favourable. Inflation is expected to decline from 4.9% in 2024 to 4.3% in 2025, staying within the Reserve Bank of India’s target range. Employment levels remain stable, although the report stressed the need for greater gender parity in the workforce.
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However, the UN cautioned that looming U.S. tariff threats could pose risks to India's merchandise exports. While key sectors such as pharmaceuticals, electronics, semiconductors, energy, and copper remain exempt for now, these protections may not be permanent.
Meanwhile, the International Monetary Fund (IMF) last month projected India’s growth at 6.2% for 2025 and 6.3% for 2026, aligning closely with the UN’s revised figures.
As global uncertainty persists, India’s relatively strong and stable growth trajectory positions it as a critical engine for the global economy.
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