India's economy faces slower growth in 2025, macro risks intensify

In 2025, macro policies will need to support domestic demand, but without compromising on macrofinancial stability risks

The year 2024 can be characterised as a “strong start, weaker finish” for India’s economy. It started with Goldilocks-like settings, with real gross domestic product (GDP) growth closer to 8 per cent and gradually easing inflation. In the last few months, however, policy tradeoffs have worsened, due to a sharper-than-expected slump in GDP growth, higher food inflation, and currency depreciation pressures. As we turn the page, what does 2025 hold in store?

 

The global backdrop appears challenging: Uncertainty remains high due to Trump 2.0 policies. We expect President-elect Donald Trump to strike fast and hard on imposing tariffs, leading to