Amid a global economic landscape marked by “heightened trade tensions and elevated policy uncertainty,” a new United Nations report projects India to remain one of the fastest-growing large economies, revising its 2025 growth forecast to 6.3 percent.

“India, whose 2025 growth forecast has been revised downward to 6.3 per cent, remains one of the fastest growing large economies,” stated the World Economic Situation and Prospects as of mid-2025, released on May 15, 2025.

The report noted that several other major developing economies, including Brazil, Mexico, and South Africa, are also facing growth downgrades, driven by weakening trade, slowing investment, and declining commodity prices.

The International Monetary Fund (IMF) has similarly revised its projections for India, forecasting growth of 6.2 percent in 2025 and 6.3 percent in 2026, down from a projected 6.5 percent in 2024.

“The revisions are smaller than for other countries, as India is less exposed to the trade shock,” said Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, during a press conference on April 24, 2025, at the IMF and World Bank Spring Meetings in Washington D.C.

The UN report warned that the recent spike in tariffs, particularly in the United States, has sharply increased production costs, disrupted global supply chains, and intensified financial volatility.

“Uncertainty over trade and economic policies, combined with a volatile geopolitical landscape, is prompting businesses to delay or scale back critical investment decisions,” the report added. “These developments are compounding existing challenges, including high debt levels and sluggish productivity growth, further undermining global growth prospects.”

As a result, global GDP growth is now projected at just 2.4 percent in 2025, down from 2.9 percent in 2024 and 0.4 percentage points below the UN’s January 2025 forecast.

“Slower global growth, elevated inflationary pressures and weakening global trade—including a projected halving of trade growth from 3.3 per cent in 2024 to 1.6 per cent in 2025—jeopardize progress toward the Sustainable Development Goals,” it warned.

The slowdown, it emphasized, is “broad-based,” affecting both developed and developing economies. Growth in the United States is expected to “decelerate significantly, from 2.8 percent in 2024 to 1.6 percent in 2025,” as higher tariffs and policy uncertainty weigh on private investment and consumer spending. The European Union’s GDP growth is forecast to remain stagnant at 1.0 percent in 2025 due to “weaker net exports and heightened trade barriers.”

China’s economy is projected to grow at 4.6 percent this year, reflecting subdued consumer sentiment, export disruptions, and ongoing challenges in the property sector.

“The tariff shock risks hitting vulnerable developing countries hard, slowing growth, slashing export revenues, and compounding debt challenges, especially as these economies are already struggling to make the investments needed for long-term, sustainable development,” said Li Junhua, United Nations Under-Secretary-General for Economic and Social Affairs. 

The report also highlighted persistent inflation risks, particularly in food prices, which continue to disproportionately impact low-income households across Africa, South Asia, and Western Asia.

“Higher trade barriers and climate shocks are further amplifying inflation risks, underscoring the need for coordinated policies—combining credible monetary frameworks, targeted fiscal support and long-term strategies—to stabilize prices and shield the most vulnerable,” it added.

While global headline inflation declined from 5.7 percent in 2023 to 4.0 percent in 2024, price pressures remain high. As of early 2025, inflation exceeded pre-pandemic levels in two-thirds of countries, with over 20 developing economies facing double-digit inflation rates, it said. 

In this uncertain environment, monetary policy challenges have become more complex. Central banks are increasingly forced to balance inflation control, exacerbated by tariff-induced price hikes, against the need to support faltering economic growth.

For developing countries, the report underscored that the bleak outlook poses serious risks to job creation, poverty reduction, and efforts to tackle inequality.

“For least developed countries—where growth is expected to slow from 4.5 per cent in 2024 to 4.1 per cent in 2025—declining export revenues, tightening financial conditions and reduced official development assistance flows threaten to further erode fiscal space and heighten the risk of debt distress,” the report stated.

It also emphasized that escalating trade tensions are straining the multilateral trading system, leaving smaller and more vulnerable economies increasingly sidelined in a fragmented global market.

Strengthening “multilateral cooperation is essential to address these challenges,” the report stressed, adding revitalizing the rules-based trading system and offering targeted support to vulnerable nations will be crucial to achieving “sustainable and inclusive development.”

The report pointed to the upcoming “Fourth International Conference on Financing for Development,” set to take place in Sevilla, Spain, from June 30 to July 3, 2025, as a key platform for addressing these pressing issues, including multilateral cooperation, debt sustainability, and financing strategies for sustainable development.

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