India will continue to lead as the fastest-growing major economy globally, with growth expected to rise in 2025, according to a Franklin Templeton report. The report highlights that government spending is increasing, and consumer sentiment remains resilient.
Despite a slowdown in 2024, India’s long-term growth outlook stays strong. The report suggests that the 2024 slowdown is temporary. It cites delayed government spending in an election year and disruptions from heavy monsoon rainfall. Indicators show recovery, with GDP growth projected at 6.5% annually until at least 2029.
The report forecasts significant growth in India’s wealth and middle class, predicting an increase of 400 million people. The number of wealthy individuals is expected to grow three-fold, driving further economic expansion.
India’s digital economy and healthcare sector show strong growth potential. The report remains optimistic about both sectors, as they benefit from structural growth.
Temporary Slowdown In 2024
India’s GDP grew by only 5.4% in the second quarter of 2024, marking the slowest growth in seven quarters. Full fiscal year growth is expected to moderate to 6.6%, down from 8.2% the previous year, according to RBI forecasts.
Recovery Driven By Government Spending And Consumption
Government spending picked up since September, focusing on infrastructure and rural development. This will support private sector growth. Consumer sentiment remains strong, and inflation is expected to ease in 2025, further boosting consumption.
The resumption of government spending, private sector investment, and robust domestic consumption will drive India’s economic recovery in 2025. The economy is set for earnings recovery and accelerated growth.
Also Read: India To Remain The Fastest Growing Economy With 6.6% Growth: UN Report
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