BS EDIT: 2025: An Economy Outperforming Expectations

By Business StandardPublished On Dec 8, 2025

A Surprisingly Strong Year

2025 is ending more favorably than forecast. Robust GDP growth and benign inflation allowed the RBI to cut rates, supporting economic momentum

Inflation: A Welcome Downtrend

Headline CPI hit 0.25% in October. With the full-year projection revised down to 2%, the broad-based disinflation has created space for monetary easing

The Rate Cut Trajectory

The MPC has cut rates by 125 bps this cycle. With inflation below target, the debate now centers on whether there is room for further reductions ahead

Growth: High but Moderating

The RBI projects 7.3% GDP growth for 2025-26, expecting a softer second half. Future growth hinges partly on the outcome of key US trade negotiations

The Near-Term Focus: The Rupee

The rupee crossed 90/$ , depreciating over 5% this year. This adjustment, though driven by equity outflows, helps exporters amid a tough trade climate

External Risks and the Road Ahead

Currency pressure may persist. A swift conclusion to US trade talks is crucial to stabilise the rupee and sustain the economy's favourable position