World Economic Situation and Prospects-2025

• 09 Jun 2025

Source: PIB 

Why in News? 

India's GDP growth forecast for 2025 has been revised down to 6.3%, from the previous projection of 6.6%, in the mid-2025 update of the "World Economic Situation and Prospects" (WESP) report. 

• The report is released by the United Nations Department of Economic and Social Affairs , in collaboration with UNCTAD and 5 UN regional commissions and it provides global and regional economic outlooks to support SDG-oriented, equitable growth policies. 

What are the Key Takeaways From the World Economic Situation and Prospects Report? 

• India-Specific Observations: 
  • Fastest-Growing Major Economy: India’s GDP growth, though revised down to 6.3% in 2025 from 7.1% in 2024, remains the highest among major global economies and  it is expected to reach 6.4% in 2026.  
  • Inflation, Monetary Policy, & Employment Outlook: Inflation is projected to decline from 4.9% in 2024 to 4.3% in 2025, remaining within the RBI’s 2–6% target range, reflecting effective monetary management.  
    • Unemployment remains broadly stable, though gender disparities in labour force participation continue to pose a structural challenge. 
  • Key Drivers of India’s Growth: 
    • Manufacturing & Exports: Manufacturing GVA grew to Rs 27.5 lakh crore (2023–24). Total exports hit a record USD 824.9 billion in 2024–25 with services exports at USD 387.5 billion and non-petroleum merchandise exports at USD 374.1 billion. 
    • Defence Production: Defence exports value also increased around  3 times with India now exporting to nearly 100 countries, signaling rising global trust in Indian defence capabilities. 
• Global Economic Outlook: Global GDP growth is projected to slow to 2.4% in 2025 (from 2.9% in 2024), and 2.5% in 2026, which spans both advanced and emerging economies. 
  • US growth is projected to fall due to tariffs and policy uncertainty, while China’s growth is estimated at 4.6% in 2025, impacted by weak demand, export disruptions, and real estate stress.. 
  • Other EMEs: Economies like Brazil, Mexico, and South Africa face downgrades driven by tepid trade, falling investment, and commodity price volatility. 
  •  Growth in Least Developed Countries (LDCs) is projected to decline from 4.5% in 2024 to 4.1% in 2025, amid falling export revenues, tighter financial conditions, reduced Official Development Assistance (ODA), and rising debt distress risks. 
• Major Global Economic Issues:  
  • Food Inflation and Insecurity: Food inflation, driven by climate shocks, currency depreciation, trade protectionism, and supply chain disruptions, remains above the headline inflation.  
  • Globally, 343 million people face acute food insecurity, with 1.9 million at famine risk in conflict zones like Gaza, Haiti, Mali, South Sudan, and Sudan. 
    • Countries like India, where food forms a large part of household spending, are worst affected. 
  • Rising Trade & Global Risks: Rising US tariffs have triggered a “tariff shock”, raising global trade costs, disrupting supply chains, and disproportionately impacting developing economies.  
    • The escalating trade tensions are weakening multilateralism and widening global inequality. 

United Nations Department of Economic and Social Affairs 

• UNDESA  is a core department of the UN Secretariat, formed in 1948, that leads the development pillar of the United Nations, supporting countries in implementing the 2030 Agenda for Sustainable Development and achieving the Sustainable Development Goals (SDGs). 
  • It functions under the UN Secretary-General and provides data, analysis, and policy guidance to Member States on economic, social, and environmental issues. 
• As the secretariat to major UN bodies like ECOSOC, the General Assembly, and the High-Level Political Forum on Sustainable Development (HLPF), UN DESA helps coordinate global efforts in poverty eradication, inclusive growth, environmental protection, and good governance. 
  • It acts as a bridge between global commitments and national action, helping countries translate UN-level agreements into actionable national policies and reforms.

Key Economic Reports and Publishers 

Publishing Body	Report
World Bank	Global Economic Prospects, World Development Report
International Monetary Fund (IMF)	World Economic Outlook, Global Financial Stability Report
World Economic Forum (WEF)	Global Competitiveness Report, Global Risks Report
UN Conference on Trade and Development (UNCTAD)	World Investment Report

UPSC Civil Services Examination, Previous Year Question (PYQ)   

Prelims

Q1. "Rapid Financing Instrument" and "Rapid Credit Facility" are related to the provisions of lending by which one of the following? (2022)   

(a) Asian Development Bank   
(b) International Monetary Fund   
(c) United Nations Environment Programme Finance Initiative   
(d) World Bank   

Ans: (b) 

Q2. ‘Global Financial Stability Report’ is prepared by the (2016)   

(a) European Central Bank   
(b) International Monetary Fund   
(c) International Bank for Reconstruction and Development   
(d) Organization for Economic Cooperation and Development   

Ans: (b)  

---

Mains  

Q. The World Bank and the IMF, collectively known as the Bretton Woods Institutions, are the two inter-governmental pillars supporting the structure of the world’s economic and financial order. Superficially, the World Bank and the IMF exhibit many common characteristics, yet their role, functions and mandate are distinctly different. Elucidate. (2013)