Fri Jan 10 07:28:29 UTC 2025: ## India’s Robust Economy to Drive South Asia Growth in 2025: UN Report
**New York, [Date of Publication]** – The Indian economy is poised for continued strong growth, fueling positive economic prospects for South Asia, according to a new United Nations report. The UN World Economic Situation and Prospects 2025 projects India’s economy to expand by 6.6 percent in 2025, driven by robust private consumption and investment. This strong performance will contribute to an overall 5.7 percent growth rate for South Asia in 2025 and 6 percent in 2026.
The report highlights several key factors underpinning India’s economic strength. Strong growth in services and goods exports, particularly in pharmaceuticals and electronics, is expected to boost activity. Expansion in manufacturing and services sectors will continue to drive the economy. Favorable monsoon rains in 2024 have also improved agricultural output expectations for 2025. Furthermore, significant investment in infrastructure development, both physical and digital, is projected to have a substantial multiplier effect on growth. The public sector’s continued investment in large-scale projects is also a crucial driver.
Despite this positive outlook, the report notes that consumer price inflation in India is forecast to slow from 4.8 percent in 2024 to 4.3 percent in 2025, remaining within the central bank’s target range. However, adverse weather conditions have impacted food prices, causing temporary inflation spikes.
While India’s economic performance is robust, the report also acknowledges potential downside risks for the South Asian region as a whole. These include escalating geopolitical tensions, weakening external demand, persistent debt challenges, and social unrest. The region’s vulnerability to climate change, as demonstrated by recent extreme weather events, also poses a significant threat.
Despite these challenges, India’s labor market remains strong, with employment indicators near record highs and urban unemployment remaining relatively stable. However, significant gender gaps in labor force participation persist.
Globally, the UN projects moderate growth of 2.8 percent in 2025 and 2.9 percent in 2026. While China is expected to experience a gradual economic moderation, strong performance in several large developing economies, including India and Indonesia, will contribute to overall global growth. However, China faces challenges such as subdued consumption growth and weakness in the property sector, as well as concerns regarding its shrinking population and rising trade tensions.
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