Economic growth poised to rebound as demand regains strength: RBI Bulletin

India’s economic growth is set to recover as domestic demand strengthens, although persistent food inflation requires close observation, the latest RBI Bulletin published on Friday stated.

An article titled ‘State of the Economy’ featured in the January Bulletin pointed out that the economic forecast for 2025 varies by country, with a slight slowdown in the US; weak to modest rebounds in Europe and Japan; and more moderate growth patterns in emerging and developing nations alongside a slower pace of disinflation compared to advanced economies.

“In India, a favorable acceleration of high-frequency economic activity indicators is observed in the latter half of 2024-25, supporting the anticipated increase in real GDP growth for this period in the NSO’s annual first advance estimates,” it stated. It also mentioned that headline inflation decreased for the second consecutive month in December, though persistent food inflation necessitates vigilant observation of secondary effects.

The piece has been written by a group led by Michael Patra, who stepped down from his role as RBI Deputy Governor earlier this month. “India’s economic expansion is set to recover as internal demand strengthens. “Rural demand keeps accelerating, showing a strength in consumption backed by improved agricultural outlooks,” stated the article.

An increase in public capital expenditure on infrastructure is expected to boost growth in vital sectors.

It further observed that increasing input cost pressures in the manufacturing industry, along with weather-related challenges and global obstacles, could potentially threaten this outlook. The central bank, nonetheless, stated that the opinions shared in the Bulletin reflect those of the authors and do not represent the stance of the Reserve Bank of India.