India will maintain its strong dynamism in 2025

According to the latest Economic Outlook released by Crédito y Caución, India's growth will remain stable in 2025 at 6.8%. Despite difficult global conditions, this market remains the world's fastest growing major emerging market. 

Private consumption improved in 2024, boosted by increased agricultural production and falling inflation, which is supporting real incomes. However, unemployment remains high, as many jobs are still dependent on the weather-sensitive agricultural sector. 

Crédito y Caución expects rural incomes to accelerate in 2025, helping to bridge the gap between robust urban consumption and weaker rural consumption. Private investment is also expected to increase, albeit gradually, due to financing conditions, which remain tight. 

The latest inflation figures have shown an upturn, driven by a combination of less favourable base effects and rising food and beverage prices. Despite the recent increase, price developments are close to the Central Bank's target of 4%. The report forecasts that the Reserve Bank of India will implement its first rate cut in February 2025. 

Government initiatives have sought to boost the manufacturing sector by improving the business environment, enhancing the logistics infrastructure, optimising tax efficiency and rationalising tax rates. The increase in manufacturing capacity is expected to translate into higher export growth in the coming years. Private investment is likely to pick up somewhat next year, boosted by the promotion of monetary easing. 

Export growth will improve as the global economy expands at a good pace and India benefits from strong demand from the United States, but there will not be a big boost in exports. Public spending is expected to contribute positively to growth in 2025 through increased spending on public infrastructure.