India to Grow at 6.5% in 2025, Retains Lead as Fastest-Growing Major Economy

The latest UNCTAD report sees India positioned to remain the fastest-growing major economy in 2025. It sees India growing by 6.5% in 2025, continuing from about 6.9% in 2024. But UNCTAD sees the global economy struggling with growth and only managing to generate a paltry 2.3% in 2025. And a slowdown of that magnitude is in sharp contrast to what UNCTAD observes as a slight deceleration of the Indian economy, which seems to be mainly driven by domestic demand.

The world economy is moving ever closer to recession, and the international trade that is so vital to every country's economy is stagnating. Trade and Development Foresight 2025 is a Ministry of Commerce publication that tries to grasp in what direction the world will be heading in terms of trade, development, and investment from now to the year 2025. It is no cheerleading pamphlet.

Public Spending and Policy Easing Support Growth

According to the UNCTAD analysis, India's resilience is based on stable public spending and a newly initiated monetary policy. The Reserve Bank of India slashed the repo rate in early 2025, cutting it by just 25 basis points. This was the first rate cut in five years, and it, along with some other moves, is intended to get household consumption cranked up again. Very much on the side of investment, the steps are meant to get businesses hungry again for more infrastructure and capital investment.

In addition, the accommodating policies made possible by a more flexible monetary stance are well suited to the kind of complex situation that combines global uncertainty with domestic growth opportunities. This mix provides exactly the right kind of space for the Indian economy. Meanwhile, in the backdrop, inflation is coming off. The ease in inflation enables a downward shift in policy rates.

South Asia Outlook and Regional Challenges

The South Asia region is also likely to do fairly well, with an overall growth forecast of 5.6% for 2025. As inflationary pressures ease across the region, most economies are expected to follow a somewhat synchronized path of monetary loosening. However, the report adds a note of caution, making it clear that not all countries in the region are equally resilient. Protracted problems with food prices, along with very complicated debt situations, keep Bangladesh, Pakistan, and Sri Lanka on the list of nations at risk. These three countries could seriously impair the region's recovery.

UNCTAD stresses that even though India is at the forefront of regional performance, there are still vulnerabilities in other areas that need to be addressed. It wants those areas to pay closer attention to fiscal sustainability and food security.

Call for Global Coordination Amid Uncertainty

The report cautions that trade policy unpredictability has now reached an all-time high. Measures taken to protect domestic economies, along with increasing tariff rates, are disrupting global supply chains and causing a slowdown in investment across many sectors. For developing countries, the added risk of protectionism is worsened by already fragile external financing and increasing debt burdens.

Yet, South-South trade growth offers a glimmer of hope. Nearly a third of global trade is already between countries of the Global South, and steps toward deeper economic integration among these nations could help shield them from the adverse effects of the downturn. UNCTAD called on developed and developing countries to hold much more regular and meaningful dialogue and coordinate policy if the aim is a stable global economy that serves development, especially in vulnerable regions.