UNCTAD estimates that India will grow by 6.5 per cent in 2025 on the back of continued robust public spending and ongoing monetary easing. The decision of the central bank to cut the interest rate by 25 basis points for the first time in five years in early February will support household consumption as well as provide a boost to private investment plans, it said
Chennai: The UN's trade and development body estimates that India will grow by 6.5 per cent in 2025 on the back of continued robust public spending and ongoing monetary easing. However, the global economy is set to grow by 2.3 per cent, below the recessionary threshold of 2.5 per cent with uncertainty touching century-high levels.
UNCTAD estimates that India will grow by 6.5 per cent in 2025 on the back of continued robust public spending and ongoing monetary easing. The decision of the central bank to cut the interest rate by 25 basis points for the first time in five years in early February will support household consumption as well as provide a boost to private investment plans, it said.
UNCTAD observed that with the rise in public debt in many countries, net interest payments are on the rise too and this will be a worry for India also.
“Net interest payments are highest in developing countries, such as Brazil, India, Mexico or South Africa. Yet, G7 economies with high public debt levels, such as Italy and the United States, also have a large differential,” it said.
Led by India, the South Asia region’s economy will expand by 5.6 per cent in 2025, as declining inflation opens the way for monetary loosening across most of the region. Nevertheless, food price volatility will remain a risk and complex debt dynamics will continue to burden economies such as Bangladesh, Pakistan and Sri Lanka.
In the case of the global economy, it is set to slow down in 2025 and move into a recessionary phase. Global economy had a slightly stronger-than-expected growth performance of 2.8 per cent in 2024. But the 2.3 per cent expansion of the world gross product in 2025 will be below the threshold of 2.5 per cent, which is a marker of a global recessionary phase.
The global outlook for 2025 is clouded by heightened policy uncertainty, the levels of which in early 2025 were the highest observed in this century.
