The Reserve Bank of India’s (RBI) February 2025 Bulletin highlights a steady but cautious global economic outlook, with India showing signs of resilience and sustained growth.

Despite uncertainties stemming from geopolitical shifts and technological advancements, the global economy continues to expand at a moderate pace. However, financial markets remain volatile, driven by concerns over the slowing pace of disinflation and potential tariff impacts.

Emerging market economies (EMEs), including India, are facing selling pressure from foreign portfolio investors (FPIs) and currency depreciation due to a strong U.S. dollar. Despite these challenges, India’s economic activity has gained momentum in the second half of FY 2024-25, supported by robust high-frequency indicators.

The Union Budget 2025-26 has been recognized for striking a prudent balance between fiscal consolidation and growth. With a continued emphasis on capital expenditure and measures to boost household incomes and consumption, the budget is expected to sustain economic momentum.

On the inflation front, retail inflation moderated to a five-month low in January, largely driven by a sharp decline in vegetable prices. This moderation offers relief to consumers and may provide additional policy flexibility in the coming months.

As India navigates the evolving global landscape, the RBI remains optimistic about sustained growth, supported by proactive fiscal measures and a resilient domestic economy.