India will grow 6.5 percent in 2025, as monetary easing and robust public spending continue to support growth, UNCTAD said in its latest economic outlook released on April 16.
“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,” the international body noted.
Reserve Bank of India’s monetary policy committee last week delivered the second consecutive rate cut bringing the policy rate down to 6 percent from 6.5 percent estimated earlier.
Economists expect the central bank to deliver more rate cuts on the back of lower inflation trajectory. RBI also lowered inflation forecast for FY26 to 4 percent from 4.2 percent projected earlier.
Data released on April 15 showed that India's inflation declined to a 67 month low of 3.34 percent in March.
India's growth is expected to slow from 6.9 percent in the previous fiscal.
The over 6 percent rate of growth will ensure that India retains its tag as the fastest growing economy, at a time when global growth is expected to fall to 2.3 percent from 2.8 percent projected earlier.
"Trade policy uncertainty is at a historical high…and this is already translating into delayed investment decisions and reduced hiring," UNCTAD said.
The slowdown will affect all nations, but UNCTAD remains concerned about developing countries and especially the most vulnerable economies, it said, highlighting that there were also opportunities in South-South cooperation for developing economies to counter headwinds.
World Trade Organisation on Wednesday projected global goods trade to contract 0.2 percent and by 1.5 percent in the case reciprocal tariffs kick in.
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