India Shines Amid Global Slowdown with 6.6% GDP Growth Forecast for 2025, Outpaces China The Indian public sector continues to play a pivotal role in funding large-scale infrastructure projects, physical and digital connectivity, and social infrastructure

India continues to be a standout performer in a globally subdued economic environment. Its strong private consumption, sustained investment, and diversified exports are driving growth. As per the World Economic Situation and Prospects 2025, Indian GDP is forecasted to grow at an 6.6 per cent in 2025. On the other hand, China's economy is projected to grow at 4.8 per cent in 2025, a slight decline from 4.9 per cent in 2024.

Consumer, Inflation and employment: mixed signals

Private consumption in India remains a key driver of growth, supported by improving labour market conditions and near-record labour force participation.

India's consumer price inflation is expected to decrease to 4.3 per cent in 2025, staying within the Reserve Bank of India's target range of 2-6 per cent. However, weather-related disruptions in 2024 have kept prices of staples like vegetables and cereals elevated.

On the employment front, India showcases resilience with urban unemployment at a stable 6.6 per cent and improved labour force participation. Yet, gender gaps in the workforce and high youth unemployment across regions like South Asia and Latin America underscore ongoing challenges.

"In India, labour market indicators remained robust during the second quarter of 2024, with labour force participation at near-record levels (Reserve Bank of India, 2024); urban unemployment stood at 6.6 per cent during this period—virtually unchanged from the rate of 6.7 per cent recorded in 2023," the report noted.

Investment boom

As per the report, the investment growth has remained strong in South Asia particularly in India.

The Indian public sector continues to play a pivotal role in funding large-scale infrastructure projects, physical and digital connectivity, and social infrastructure. Strong investment growth is expected to continue through 2025.

At the same time, it is exporting more products like medicines, electronics, and services. This growth in exports is boosting the manufacturing and service industries, making the economy stronger.

While the global investment sees modest improvement, yet challenges remain after a two-year slump, investment has grown by an estimated 3.4 per cent globally in 2024, though with significant regional variations. Among developed economies, investment activity (in particular residential investment) weakened in Europe and Japan during the first half of 2024, while the United States maintained strong investment growth in all sectors, including residential and non-residential structures, equipment, and intellectual property.

"Several developing economies, including India, China, and Mexico, have maintained robust investment growth, while African nations have faced limited public investment due to high debt servicing burdens, and Western Asia has experienced low investment growth amid subdued oil revenues," said the report.

Public debt in major economies, including India, China, and the United States, has reached concerning levels, averaging over 80 per cent of GDP.

Additionally, South Asia faced severe climate challenges in 2024, with countries like Bangladesh, India, Pakistan, and Sri Lanka enduring heatwaves, droughts, and erratic rainfall during the first half of the year. These events significantly impacted agriculture, resulting in lower crop production and higher food prices. Nevertheless, India reports strong investment and economic activity for 2025.