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TMI BlogIndia’s Trade and Economic OutlookX X X X Extracts X X X X X X X X Extracts X X X X ..... India’s Trade and Economic Outlook X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia's March 2025 bulletin which highlights the state of the economy in the country. The latest data-driven analysis underscores the strength of domestic fundamentals amidst a volatile global backdrop. While global economic uncertainties persist, India's economy shows strong growth, supported by robust consumption and government spending. Inflation has moderated, and policy measures have helpe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d stabilize market liquidity. However, foreign portfolio outflows and currency depreciation remain key risks. Domestic Economic Developments Resilient GDP Growth Amidst Global Challenges * India's GDP is projected to grow by 6.5% in FY 2024-25, according to NSO's Second Advance Estimates. * Quarter 3 GDP growth was 6.2%, rebounding from 5.6% in Q2 due to higher private consumption and govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment spending. * Sectors driving growth: construction, trade, and financial services. Foreign Portfolio Outflows & Currency Risks * Sustained foreign portfolio investor (FPI) outflows put pressure on stock markets and the rupee. * However, domestic investors increased their holdings, stabilizing market ownership structures. * Rupee depreciation risks remain due to external uncertainties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inflation Trends: Headline Inflation Eases * CPI inflation fell to a 7-month low of 3.6% in February 2025, mainly due to a decline in vegetable prices. * However, core inflation (excluding food & fuel) rose to 4.1%, indicating persistent price pressures. Employment Trends * Manufacturing employment grew at the second-fastest rate since the PMI survey began. * Services sector employment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso expanded significantly, reflecting strong demand. * Urban unemployment remains at a historic low of 6.4%. Trade & External Sector Import and Export Trends * Exports grew marginally by 0.1% to $395.6 billion from April 2024-Feb 2025 but merchandise exports declined by 10.9% YoY in February, largely due to base effects and weak global demand. * Top-performing export sectors: elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tronics, rice, and ores. * Weak export sectors: petroleum products, engineering goods, chemicals, and gems & jewellery. * Imports increased by 5.7% to $656.7 billion, driven by gold, electronics, and petroleum during April 2024-Feb 2025, however it fell by 16.3% in Feb 2025, leading to a narrowing trade deficit. * Oil and gold imports dropped significantly, contributing to the decline in ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rall imports. * Imports of electronic goods and machinery remained strong, reflecting domestic investment demand. Financial & Monetary Policies RBI's Liquidity Management * RBI used open market operations (OMO), daily repo auctions, and dollar/rupee swaps to manage liquidity. * These measures helped stabilize domestic liquidity despite capital outflows. Sector-Specific Developments Agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulture Sector India's foodgrain production for 2024-25 is estimated at 330.9 million tonnes, marking a 4.8% increase from 2023-24, driven by kharif production up 6.8% and rabi up 2.8%, according to second advance estimates. Automobile Sector * Car and motorcycle sales declined in February due to weaker demand. * Tractor sales saw double-digit grow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th, indicating strong rural economy demand. Infrastructure & Construction * Toll collections and E-way bills recorded double-digit growth, signalling robust infrastructure activity. * Government spending on infrastructure projects supported economic momentum. Global Setting Trade War & Tariffs Impacting Growth * The global economy entered 2025 with strong momentum but is now slo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing due to increased protectionism and trade restrictions. * US-China tariff escalations could reduce US GDP growth by 0.6 percentage points in 2025 and shrink the economy by 0.3-0.4% in the long run. * OECD lowered global GDP forecasts to 3.1% in 2025 and 3.0% in 2026 due to slowing demand. Market Volatility & Currency Fluctuations * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... US dollar lost gains made since November 2024 due to trade policy uncertainty. * European bond yields surged as Germany and others increased military spending. * Equity markets worldwide have been volatile, reflecting fears of slowing growth. Commodity Markets & Inflationary Pressures * Global oil prices fell 15% since mid-January 2025 due to reduced demand expectations. * Gold prices hit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a record high of $3000 per ounce due to investor flight to safety. * Food production outlook improved, with cereal production exceeding 2024 levels. Conclusion Despite global economic headwinds, India's growth remains stable at 6.5%, supported by strong domestic demand. Inflation is under control, though core inflation remains sticky, necessitating careful monetary management. Trade challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s persist due to weak global demand, but a narrowing trade deficit offers some relief. While foreign investor outflows pose risks, robust domestic investment provides resilience. The RBI's proactive policies have played a crucial role in stabilizing liquidity and inflation expectations. Overall, India's economy is well-positioned for growth, but uncertainties in global markets, financial volatilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, and trade disruptions remain key risks. Sustained policy support and domestic resilience will be essential in maintaining economic momentum.
References:
https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/0BULT19032025F9CCA0AB1F7294130A950E2FD5448B5FC.PDF X X X X Extracts X X X X X X X X Extracts X X X X
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