Page 5 - Demo

www.projectstoday.comJune 2025Economic Review 5around trade negotiations, risks remain elevated. This has led to downward revisions in global growth and trade forecasts by major multilateral bodies. However, recent recovery in equity markets, a weaker dollar index, and lower crude prices have helped ease market volatility, although gold prices continue to stay high.Domestically, economic momentum is expected to hold firm in 2025%u201326, driven by rising private consumption and sustained investment in fixed assets. Rural economic resilience and a growing services sector are likely to bolster both rural and urban demand. Investment is also gaining traction, supported by increased capacity utilisation, stronger corporate balance sheets, and ongoing government capital expenditure.Despite some pressure from trade policy uncertainties affecting merchandise exports, the recent conclusion of a free trade agreement with the UK and ongoing talks with other nations offer support for trade growth. On the supply side, prospects remain strong with an abovenormal southwest monsoon forecast and robust allied agricultural activities, while the services sector continues to expand. Nonetheless, risks such as geopolitical tensions and weather-related disruptions persist. Real GDP growth for 2025%u201326 is forecast at 6.5 percent, with quarterly estimates ranging between 6.3 and 6.7 percent. Overall, risks are considered balanced.Headline inflation, measured by the Consumer Price Index (CPI), declined to a near six-year low of 3.2 percent in April 2025, largely due to falling food prices for the sixth consecutive month. Fuel inflation turned positive, partly because of rising LPG prices, while core inflation remained stable despite the impact of higher gold prices.Looking ahead, inflation is projected to stay moderate. Record wheat output and a good Rabi harvest are expected to ensure an adequate food supply. A strong start to the monsoon season is also favourable for Kharif crops. Rural inflation expectations are already easing, and most indicators suggest continued price moderation, including in global crude oil. That said, weather-related and tariff-related risks require close monitoring. Assuming a normal monsoon, CPI inflation for 2025%u201326 is projected at 3.7 percent, with quarterly figures rising gradually from 2.9 percent in Q1 to 4.4 percent in Q4. Risks are evenly distributed.Inflation has eased substantially from levels above the RBI%u2019s tolerance band in October 2024 to below the 4 percent target, with a broad-based moderation. The current outlook supports the expectation that inflation will remain not only aligned with the target but may even slightly undershoot it. While food prices are expected to stay low, core inflation is also projected to remain soft amid easing global commodity prices and slower global growth. Reflecting this, the annual inflation forecast has been revised downward from 4.0 percent to 3.7 percent.IIPIndia%u2019s industrial output witnessed moderate growth in April 2025, with the Index of Industrial Production (IIP) rising by 2.7 percent compared to the same month last year, according to data released by the Ministry of Statistics and Programme Implementation. This marks a deceleration from the 3.94 percent growth seen in March 2025 and remains lower than the levels recorded in April 2024.The Manufacturing sector was the main driver of growth, registering an increase of 3.4 percent. The overall IIP for April 2025 stood at 152.0, up from 148.0 in April 2024. Among the major sectors, Mining contracted by 0.2 percent, Manufacturing grew by 3.4 percent, and Electricity output rose by 1.1 percent. The sectoral indices were recorded at 130.6 for Mining, 149.5 for Manufacturing, and 214.4 for Electricity.Within Manufacturing, 16 out of 23 industry groups at the two-digit NIC level recorded positive growth compared to the previous year. Leading the growth were Basic Metals (4.9 percent), Motor Vehicles, Trailers and SemiTrailers (15.4 percent), and Machinery and Equipment not elsewhere classified (17.0 percent).Based on use-based classification, the indices for April 2025 stood at 151.6 for Primary goods, 114.3 for Capital goods, 164.2 for Intermediate goods, and 191.6 for Infrastructure and Construction goods. Consumer durables and consumer non-durables recorded indices of 127.2 and 148.4, respectively. Growth rates under this classification showed Capital goods leading with a strong 20.3 percent increase, followed by intermediate goods at 4.1 percent and Infrastructure/Construction goods at 4.0 percent. Consumer durables rose by 6.4 percent, while