Trade tensions, policy uncertainty still hurting global growth, but India shows resilience: RBI

NEW DELHI: Global growth continues to face several challenges due to ongoing trade tensions, policy uncertainty, and weak consumer sentiment, says a recent report by the Reserve Bank of India (RBI). Despite these global headwinds, the report mentioned that the Indian economy has remained resilient and continues to show signs of steady progress.

It said “Amidst these challenges, the Indian economy exhibited resilience. Various high frequency indicators of industrial and services sectors sustained their momentum in April”. The report highlighted that persistent trade frictions, rising uncertainty in policymaking, and low consumer confidence are putting pressure on the world economy. Although a temporary pause in tariffs has provided some relief, the overall global outlook remains fragile.

It also added that the emerging markets and developing economies (EMDEs), especially those in Asia, are expected to experience slower growth due to the impact of tariffs. Financial turbulence is also emerging as a key risk to global growth projections.

In contrast to this global uncertainty, India’s economy is showing strength. High-frequency indicators for both the industrial and services sectors maintained their momentum in April. The resilience is further reflected in record Goods and Services Tax (GST) collections during the month.

The agriculture sector is also expected to perform well. A bumper rabi harvest and higher planting for summer crops, along with favourable forecasts for the 2025 southwest monsoon, are positive signs for rural income and food production.

The RBI said, “India continues to be an economy supported by stability- monetary, financial and political; policy consistency and certainty; congenial business environment; and strong macroeconomic fundamentals”. Inflation trends are encouraging as well. Headline Consumer Price Index (CPI) inflation fell for the sixth month in a row to reach its lowest level since July 2019. This decline was mainly due to a continued easing of food prices.

The report noted that domestic financial markets were under pressure in April, but saw a turnaround beginning in the third week of May. In the automobile sector, trends were mixed. Wholesale automobile sales fell 13.3 per cent year-on-year in April, mainly due to a high base effect that affected two-wheeler sales.

However, tractor sales showed strong growth, though the pace slowed. Vehicle registrations rose 2.9 per cent year-on-year, with the transport segment seeing its highest growth in six months during April 2025. Overall, the RBI report emphasized that as advanced economies struggle with economic uncertainty, India continues to stand out as a promising destination for long-term investors. (ANI)