The IMF projects global growth at 3.2% for 2024 and 3.3% for 2025, which is lower than pre-pandemic levels but stable.
While some advanced economies (AEs) and emerging markets (EMDEs) continue to grow, growth disparities persist due to regional economic conditions, monetary policies, and geopolitical factors.
United States (US): Growth is expected to remain strong at 2.8% in 2024 due to resilient domestic consumption and employment.
Eurozone: Growth remains weak (0.8% in 2024, 1.0% in 2025), especially in manufacturing-intensive economies like Germany and Austria, which suffer from structural weaknesses and declining global demand.
China: Economic activity has slowed due to weak private consumption, lower investment, and a struggling real estate sector.
Japan: Growth hampered by supply chain disruptions and sluggish consumer demand.
Services sector: Continues to be the primary growth driver globally. Strong expansion seen in financial services, consumer services, and business-related activities.
Manufacturing sector: Faces a slowdown due to supply chain disruptions, weak external demand, and trade restrictions. The global Purchasing Managers’ Index (PMI) has shown contraction trends in 2024.
Global inflation is moderating, thanks to tighter monetary policies and stable commodity prices.
However, services inflation remains high, preventing full-fledged disinflation.
Shipping disruptions (such as the Red Sea crisis and delays at the Panama Canal) are causing supply bottlenecks, leading to higher freight costs and supply chain pressures.
Central banks in major economies are shifting toward monetary easing, following a decline in inflation.
However, uncertainty remains over the pace of rate cuts and the long-term policy rate.
The Federal Open Market Committee (FOMC) dot plots show a wide variation in interest rate expectations, signaling economic uncertainty.
Ongoing conflicts, including the Russia-Ukraine war and Israel-Hamas tensions, pose risks to global energy security, trade, and financial markets.
Trade tensions between major economies (US-China, EU-UK) are increasing policy volatility and supply chain risks.
Cybersecurity threats are rising due to the digitization of critical infrastructure, adding another layer of risk to economic stability.
India’s GDP is estimated to grow at 6.4% in FY25, making it one of the fastest-growing major economies.
Growth is supported by strong agricultural performance, a resilient services sector, and steady private consumption.
Despite external challenges, macroeconomic stability remains intact, backed by fiscal discipline and a healthy external sector.
Agriculture: Growth is expected at 3.8% in FY25, supported by a record Kharif production, a favorable monsoon, and improved irrigation capacity.
Industry: Growth is estimated at 6.2%, but manufacturing faces challenges due to weak global demand and supply chain disruptions.
Services: Expected to grow at 7.2%, driven by strong IT, financial services, real estate, and public administration sectors.
Private Final Consumption Expenditure (PFCE): Increased 7.3% in FY25, driven by strong rural demand and improving consumer confidence.
Gross Fixed Capital Formation (GFCF): Investment growth moderated to 6.4%, mainly due to uncertainty in private sector investment and election-related delays in government capex.
Housing sector: Growth in real estate has slowed slightly due to a high base effect and a correction in demand-supply dynamics.
Merchandise exports grew by 1.6% YoY, constrained by weak global demand and lower commodity prices.
Services exports remained strong, helping offset the merchandise trade deficit.
Remittances continued to rise, with India remaining the largest recipient of remittances globally.
Current Account Deficit (CAD) remained stable at 1.2% of GDP, well within manageable levels.
The Union government has improved fiscal discipline, ensuring economic stability.
Capital expenditure has been prioritized over revenue expenditure, focusing on infrastructure and long-term growth.
State finances are increasingly reliant on tax devolution from the Union government, highlighting federal fiscal dependencies.
CPI inflation softened to 4.9% (April-Dec 2024), down from 5.4% in FY24.
Core inflation (excluding food and fuel) declined significantly, signaling successful monetary policy measures.
Food inflation remained volatile, primarily due to disruptions in vegetable (TOP: Tomato, Onion, Potato) and pulses prices.
Supply chain issues and erratic weather patterns contributed to food price instability.
India’s external trade balance improved due to a strong services trade surplus and record-high remittance inflows.
Despite a wider merchandise trade deficit, the Current Account Deficit (CAD) remains manageable at 1.2% of GDP.
Rupee remains stable against the dollar, benefiting from strong foreign exchange reserves and capital inflows.
Geopolitical and trade uncertainties pose risks to global economic stability and Indian exports.
Commodity price fluctuations could lead to inflationary pressures and impact import costs.
Private investment remains a concern, requiring policy interventions to boost corporate spending.
Government-led infrastructure investment is expected to boost economic momentum.
Continued reforms in labor, land, and ease of doing business will enhance global competitiveness.
Stable macroeconomic conditions, rural demand, and improved private sector confidence will drive consumption growth.
India’s growth remains resilient despite external shocks.
Structural reforms are critical for sustaining medium-term economic expansion.
Fiscal discipline and monetary policy coordination are crucial for economic stability.
Inflation control remains a key challenge, with food prices being the most volatile component.
The RBI’s monetary policy will continue balancing growth and inflation concerns.
Policy rate decisions in major economies (US, EU) will impact Indian monetary trends.
Global trade tensions and geopolitical risks pose a challenge to India's export sector.
Services exports and remittances will continue to be a key stabilizing factor.
India’s external sector is expected to remain stable, supported by forex reserves and a strong financial position.
Investment in infrastructure and digital economy will drive long-term growth.
India must enhance ease of doing business to attract FDI.
Reforms in taxation, labor laws, and financial markets are necessary for economic resilience.
