UN Projects India’s GDP Growth at 6.6% for 2025, China to Slow to 4.8%

India’s economy is expected to grow by 6.6% in 2025, following a projected expansion of 6.9% in 2024, driven primarily by private consumption and investment, according to the UN World Economic Situation and Prospects (WESP) 2025 report released on Thursday. The report highlights that India’s robust export growth in services and select manufactured goods will further support economic activity.

China Faces Slowdown as Economic Weakness Persists

In contrast, China’s economy is projected to continue its gradual moderation, with growth expected to slow to 4.8% in 2025, down from an estimated 4.9% in 2024. The slowdown is attributed to weak household consumption, ongoing challenges in the property sector, and rising trade tensions.

Global Growth Remains Stagnant at 2.8% in 2025

The UN report projects global economic growth to remain unchanged at 2.8% in 2025, the same as in 2024. Despite the resilience shown by the global economy in navigating several reinforcing shocks, growth remains below the pre-pandemic average of 3.2%. This persistent weakness is attributed to sluggish investment, slow productivity growth, and high debt levels across the globe.

Lower Inflation and Monetary Easing to Provide Modest Boost

While lower inflation and ongoing monetary easing in many economies may provide a modest boost to global economic activity in 2025, risks still loom large. Geopolitical conflicts, rising trade tensions, and elevated borrowing costs present significant challenges, particularly for low-income and vulnerable countries. The report cautions that fragile growth in these regions could undermine progress towards achieving the Sustainable Development Goals (SDGs).

UN Urges Collective Action to Address Global Risks

United Nations Secretary-General Antonio Guterres, in the foreword of the report, stressed the need for urgent and collective action to address escalating economic risks. He emphasised that in today’s interconnected economy, economic shocks in one part of the world often ripple through to other regions, affecting global prices. He urged countries to work together to build on the progress made, stating:

“We’ve set a path. Now it’s time to deliver. Together, let’s make 2025 the year we put the world on track for a prosperous, sustainable future for all.”

Economic Risks in East and South Asia

The report also highlights mounting risks in East and South Asia, which could dampen the region’s economic prospects. Key challenges include:

• Escalating geopolitical tensions and trade disputes, which strain economic relationships.
• Climate change impacts, including rising temperatures and extreme weather, which exacerbate inflation and threaten food security.
• Weakness in China’s property sector, which continues to create ripple effects across the region.
• High debt levels across South Asia, where elevated public and external debt poses risks to economic stability.

Policy Responses in East and South Asia

Governments across East and South Asia have responded to these challenges with targeted measures:

• Monetary easing: In 2024, several central banks in the region lowered interest rates in response to declining inflation, though some authorities remained cautious due to concerns about volatile food prices and high debt levels.
• Fiscal strategies: Countries are focusing on regaining fiscal space through strategic public spending and economic reforms aimed at boosting activity and ensuring long-term stability.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.