India’s economy in 2025 is expected to remain resilient despite global uncertainties, particularly with potential instability arising from trade relations with the US under President Trump.
While rural demand is projected to strengthen, urban demand has been slowing, and private investment has yet to recover significantly. The strengthening dollar and high US bond yields could pressure India’s currency, leading to increased volatility in the market.
Additionally, uneven private investment cycles, predominantly driven by government spending, may face challenges from China’s overcapacity and shifting trade dynamics. However, a rebound in rural demand, aided by favorable weather conditions, could provide a boost to the economy.
Commodity prices are anticipated to decrease, reducing inflationary pressures for India in 2025. Merchandise exports may struggle due to sluggish growth in developed economies, but strong service exports are likely to help maintain manageable current account deficits. Overall, while challenges persist, India’s economy is projected to continue its growth trajectory amid these complex factors.