How the Global Economic Slowdown is Affecting India's Growth in 2025 ?
In 2025, the world economy is going through a slow phase. The impact of global economic slowdown is visible in every country in the face of inflation, geopolitical tensions and trade disruptions and India is also not suffering from it.
While world GDP growth is estimated to be only 2.4%, India’s growth has also slowed down to around 6.3%. Let us understand how global slowdown is affecting India’s economy in 2025.
📉 Major Impact Areas of Global Slowdown in India
- Export Sector Under Pressure : India’s export sectors – such as IT services, textiles, pharma, electronics – are suffering due to reduced global demand. Big buyer countries like the US, Europe and China are cutting budgets due to global economic slowdown. IT exports have fallen by up to 7%. Textile and chemicals orders have also reduced.
- Drop in Foreign Investments: FDI inflow has decreased by almost 12% in the first half of 2025. Global investors are now more cautious. Funding in startups and fintech companies has slowed down. Volatility has also increased in the stock market.
- Rupee Depreciation & Import Costs: The Rupee has weakened in comparison to the Dollar, as a result of which import prices are under pressure. Imported items like petrol, diesel and edible oil have become expensive due to which inflation is increasing. There is pressure on middle class households.
- Rising Inflation and Consumer Impact: There has been a slowdown in consumer spending due to global uncertainty, especially in rural areas. FMCG sales are showing low volume growth. EMI-driven consumption is also affected.
- Employment and Job Market Slowdown: Private sector hiring has slowed down. IT and startup layoffs have completely ruined the job market due to global economic slowdown. MGNREGA demand for rural employment has increased by 18%.
🛠️India’s Internal Strengths and Buffers
- Government Spending and Reforms – The government has increased capital expenditure (Capex) to boost infrastructure and manufacturing. PLI (Production Linked Incentive) schemes are giving manufacturing push. Investment is going on in Railways, roads, EV and infra.
- Growing Domestic Demand – Despite inflation, spending in urban India is still steady. There is moderate recovery in sectors like e-commerce, electronics, travel. Middle class is supporting the demand economy.
🧭Sector-Wise Snapshot
| Sector | Impact |
| IT & Services | Client budget cuts, project delays |
| Manufacturing | Mixed; PLI helping cushion |
| Agriculture | Monsoon + cost of inputs critical |
| Retail/FMCG | Volume pressure, inflation hit margins |
• IT & Services – Budget cuts from clients
• Manufacturing – PLI may cushion impacts
• Agriculture – Monsoon dependency + global fertilizer prices
• Retail & FMCG – Resilient but price-sensitive consumers
🔍 Regional Breakdown (World Bank Data)
| Region | 2025 Growth Forecast |
| East Asia & Pacific | 4.50% |
| South Asia | 5.80% |
| Europe & Central Asia | 2.40% |
| Latin America & Caribbean | 2.30% |
| Middle East & North Africa | 2.70% |
| Sub-Saharan Africa | 3.70% |
| Low-Income Countries (LICs) | 5.30% |
🔮 Expert Forecasts for 2025
1. 📢 IMF Forecast: India GDP growth ~6.3%
2. 📢 Global Average: ~2.4%
3. 📢Developing countries like Brazil are also facing slowdown.
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🧾 Conclusion
Global slowdown has had a significant impact on India’s economy – exports down, rupee volatile, investments cautious. But India’s economy is still relatively stable in view of internal demand, government reforms and digital adoption.
If global conditions improve in the coming months, then India can show very rapid recovery.
