Despite the downgrade, India will remain one of the fastest growing large economies in the world under UNDESA’s “World Economic Condition and Outlook, Mid-2025 Update”, and is backed by strong domestic consumption and government spending. “Resilient private consumption and strong public investment and strong exports of services will support economic growth,” it said.
Looking ahead to 2026, UNDESA predicts India’s GDP growth to fall to 6.4%. Optimism about financial markets, steady gains from the inventory index, optimism gained in manufacturing activity and the increase in exports suggest that “India’s economy is not only keeping its corporate status, but also making progress in an uncertain global environment”, the government said on Friday.
The share of manufacturing in India’s economic growth has remained stable over the past decade, rising to 17.3% in fiscal 24 of 17.2% in fiscal 2014. “This steady growth highlights the increasing role of the industry in India’s economic landscape,” the government noted.
On April 2, the United States imposed a 26% mutual tariff on India’s imports. Key sectors such as pharmaceuticals, electronics, semiconductors and energy have been exempted from responsibilities. President Donald Trump then announced the implementation of the 90-day tariffs until July 9, although the benchmark tariffs remained 10%.
While the exemptions may mitigate the economic impact on India, the report notes that these may not be permanent. Overall, India’s exports increased to $824.9 billion in fiscal 25, up 6.01% from $778.1 billion in fiscal 24. “Exports, especially in strategic areas such as defense production, are expanding steadily,” the government said on Friday.
Defense exports soared to Rs 262 crore from Rs 68.6 crore in fiscal 2014. The risk of tariffs hits vulnerable developing countries in the United Nations inadequate economic and social affairs side-business measures, in particular, the investment required for long-term, sustainable development will be hit by vulnerable developing countries, working to slow growth, reduce export income and exacerbate debt challenges, especially as these economies are already working to achieve the investment required for long-term, sustainable development. ”
U.S. economic growth will drop to 1.6% from 2.8% in 2024 – down from 1.9% previous forecast – with higher tariffs and policy uncertainties expected to undermine private investment and consumption, as reported.
It added that China’s growth is also expected to drop from early estimates to 4.6% due to weak consumer sentiment, export-centric manufacturing disruptions and ongoing problems in the real estate sector.
Globally, GDP growth is expected to drop to 2.4% from 2.8% in 2025.
“Global growth is slower, inflationary pressures have increased and weakened global trade, including the expected halving of the halving of trade growth,” UNDESA said.
