The Reserve Bank’s monthly bulletin for January 2025 has informed us that India’s economic growth is poised to rebound as domestic demand has started to regain strength.
As per the ‘State of the Economy’ article authored by a team led by RBI Deputy Governor Michael Debabrata Patra, rural demand continues to gain momentum, reflecting a resilience in consumption, supported by brighter agricultural prospects.
The article adds that a revival in public capex on infrastructure is likely to stimulate growth in key sectors; however, the rising input cost pressures in the manufacturing sector, coupled with weather-related exigencies and global headwinds, could pose some risks. While stating that headline inflation eased for the second successive month in December, the article warns of stickiness in food inflation that continues to warrant careful monitoring.
The article says that the economic outlook for 2025 is divergent across countries, with some loss of speed in the US; weak to modest recoveries in Europe and Japan; and more moderate growth profiles in emerging and developing countries alongside a more gradual disinflation relative to advanced economies.