India Braces for 2025: Resilience Amidst U.S.-China Trade War Shocks

India is expected to remain relatively insulated from potential U.S.-China trade war shocks in 2025, as per Goldman Sachs. Despite a forecasted economic slowdown, strategic monetary policy and structural growth prospects are anticipated to sustain India's economic stability amidst global uncertainties.

India's economic resilience may protect it from upcoming global turmoil stemming from a potential U.S.-China trade conflict in 2025, according to a report by Goldman Sachs. The report notes that India's structural growth outlook remains strong, despite anticipated global uncertainties.

Although insulated, India faces a cyclical slowdown, with GDP growth expected to decelerate to 6.3% annually following fiscal consolidation and tight credit growth measures imposed by the Reserve Bank of India (RBI). The central bank's cautious monetary strategy, with rate hikes projected to ease by 50 basis points by mid-2025, reflects the economic conservatism needed to navigate currency fluctuations and global trade shocks.

While inflation is predicted to align with the RBI’s targets, a limited rate-cut cycle is anticipated, keeping monetary policy close to a nominal neutral rate of 6%. A measured 25-basis-point repo rate cut is forecasted for February and April 2025, supported by a liquidity surplus fostering lower overnight inter-bank rates, hence demonstrating India's stability amidst global trade challenges. (ANI)