The year the global economy reaches new heights, while hidden challenges quietly build beneath the surface.
A Year of Growth, Change, and Uncertainty All at Once
2025 is a year of stark contrasts. Front-running equity markets are shattering records, India is driving the lead for global growth, and technology is revolutionizing the way we live and work at a breakneck pace. But beneath the euphoria, there’s a less obvious undertone of risk — trade tensions that could bring supply chains crashing down in the blink of an eye, mercurial weather menacing crops and infrastructure, and policy shifts that could tip the balance between solid growth and skid.
For families, the year has been a combination of relief and vigilance. Lower GST on essentials and higher income tax exemptions mean more disposable income, but rising global prices for some imports and uncertainty in certain job markets keep spending measured. It’s a year where the headlines tell a story of success, but the fine print reveals a more complex reality — one that touches both boardrooms and living rooms.
Markets Are Rising Fast, But Can They Hold Steady?
Markets across the globe have been on a winning streak in 2025, fuelled by easing inflation and solid company earnings. The MSCI All‑World Index (excluding the US) has climbed over 23% so far this year, with emerging markets and Europe leading the charge. In the US, the S&P 500 is heading toward the 6,500 mark, powered by technology and energy stocks.
India’s markets have been equally buoyant. The Sensex is hovering near 80,700 and the Nifty 50 around 24,700, lifted by 7.8% GDP growth in the first quarter of FY26. Automobiles, consumer goods, and metals are among the star performers. Gold, meanwhile, has surged more than 31% this year as investors seek safe havens in uncertain times.
Top 3 Performing Sectors in India – 2025
| Rank | Sector | Why They’re Doing Well |
| 1 | Information Technology | High demand for outsourcing, AI use, and digital projects |
| 2 | FMCG (Fast‑Moving Consumer Goods) | Rising incomes, urban growth, and lower GST on essentials |
| 3 | Healthcare & Insurance | More health awareness, government schemes, and private investment |
India’s Economic Strength Compared to the Rest of the World
Economic indicators are akin to the economy’s health check — they reveal if it’s running hot, slowing, or boiling over. India’s economy grew by 6.4% in 2024. During 2025, growth will probably creep higher to 6.5%, as Q1 FY26 growth reached 7.8%, a higher percentage than the 6.5% seen a year ago in the same quarter. That marginal increase places India firmly at the top as the fastest-growing major economy.
Inflation has also been relatively tame compared to other emerging markets — around 4% in India versus 4.5% in Brazil, 5.2% in South Africa, and far higher in Turkey and Argentina. This stability gives India more room to keep interest rates supportive for growth.
Key 2025 Economic Indicators – India & Major Economies
| Country/Economy | GDP Growth (%) | Inflation (%) | Forex Reserves (USD bn) | Manufacturing PMI | Services PMI |
| India | 6.5 | 4.0 | 690 | 59 | 63 |
| China | 4.7 | 1.8 | 3,200 | 51 | 53 |
| US | 2.8 | 2.7 | N/A | 52 | 54 |
| Brazil | 2.0 | 4.5 | 350 | 50 | 51 |
| South Africa | 1.3 | 5.2 | 55 | 49 | 50 |
| Euro Area | 1.3 | 2.5 | N/A | 48 | 50 |
Global Forces That Are Shaping the Economy in 2025
Several big forces are pushing and pulling the global economy this year. Trade tensions have flared, with the US imposing tariffs of up to 50% on Indian goods and 60% on Chinese goods, making some products more expensive and disrupting trade flows. Indian‑made laptops and smartphones, however, have escaped these tariffs, keeping US prices steady and giving India’s electronics exports a boost.
Elsewhere, nations such as Kenya, Sri Lanka, and Panama are taking loans denominated in Chinese yuan or Swiss francs to escape high US interest rates. Renewable energy is growing strongly, but large-scale storage is a problem. And technology — particularly AI — is raising productivity while transforming labor markets.
Example – How tariffs can change the price of a common imported product:
If an Indian textile item shipped to the US that once retailed for $100 is forced to pay a 50% tariff, its price increases to $150 before factoring in shipping and retail mark‑ups. That makes it harder to compete with similar products from lower‑tariff nations, which can result in job and sales loss in export‑oriented sectors.
How Government Policies Are Changing Prices and Spending
Policy changes in 2025 are having a direct impact on what people pay and how they spend. From September, most goods and services in India fall into just two GST rates — 5% and 18%. Essentials and life‑saving drugs are taxed at 0–5%, while two‑wheelers, small cars, TVs, ACs, and cement are at 18% (down from 28%).
This means two‑wheelers up to 350cc could be ₹3,000–₹7,000 cheaper, and a 50kg bag of cement may cost ₹25–₹30 less, lowering building costs.
Example – How GST cuts can change a household budget:
A family spending ₹1,500 a month on soaps, shampoos, and toothpaste could now save ₹50–₹75 each month thanks to the GST cut from 12% to 5%. Over a year, that’s ₹600–₹900 back in their pocket — enough to cover a utility bill or part of a school fee.
Income tax relief now exempts individuals earning up to ₹12 lakh a year, leaving more money in people’s hands. The government has also committed ₹12 lakh crore to infrastructure — roads, railways, and renewable energy — and increased support for farmers through higher minimum support prices and cheaper machinery.
The Economic Ideas That Help Explain What’s Happening
Some of the shifts we’re seeing are straight out of the economics playbook. Keynesian ideology advocates for tax reductions and government expenditure on infrastructure to maintain robust demand. Purchasing Power Parity encourages us to remember that exchange rates will cause prices to gravitate towards equality in the long run across nations, determining trade competitiveness. And when markets are unable to correct issues independently — such as the delayed use of clean energy — governments intervene, such as with subsidy programs for renewable energy.
What Might Go Wrong and What Might Go Right in the Coming Months
The future has hazards as well as potential. Trade wars could intensify, tariffs might murder world trade, and geopolitical tensions could push up the price of oil and commodities. Harsh weather might also disrupt agriculture and infrastructure.
Positively, India’s soft inflation and strong domestic demand leave it with room to grow.
GST reform and tax reductions may raise expenditure later in 2025 and early 2026. Solar and wind energy, electric vehicles, and digital services are set for rapid growth, and export market diversification may diminish dependence on the US.
Which Industries Are Growing and Which Ones Are Falling Behind
Benefiting:
- FMCG — lower GST on essentials.
- Automobiles (especially EVs) — price cuts and incentives.
- Renewable energy — policy support and investment.
- Healthcare & insurance — tax breaks on life‑saving drugs and insurance.
Struggling:
- Luxury goods & high‑end cars — higher GST at 40%.
- Coal & polluting fuels — higher taxes to discourage use.
- Export‑dependent sectors facing US tariffs — textiles, gems & jewellery, seafood.
How the Changes Are Touching Everyday Lives
For most families, 2025 has been a combination of relief and testing times. Reduced GST on necessities and increased income tax exemptions result in more disposable income, which families are employing to pay school fees, utility bills, or as a war chest in case of emergencies. Consumer goods and construction sector small businesses are receiving an added boost as prices of cement and two-wheelers have fallen.
But not all are benefiting equally — workers in US tariff-affected industries that export heavily are seeing fewer orders, and some plants have cut back on production or hiring. Imported items subject to higher tariffs, from some electronics to specialty textiles, are significantly more costly in stores, causing many consumers to turn to local substitute
What the Government and Officials Are Saying
The Finance Minister has described the 2025 budget as “a growth‑oriented, people‑centric plan” aimed at “easing the cost of living while building the foundations for long‑term prosperity.”
Trade ministry officials have emphasised that India is “actively engaging with global partners to secure fair market access” and “protect the competitiveness of our exporters” in the face of new tariffs.
The GST Council has stated that the simplified two‑slab structure is designed to “reduce compliance burdens for businesses and ensure that essential goods remain affordable for all households.”
Meanwhile, the Ministry of New and Renewable Energy has called the government’s clean‑energy investments “a dual opportunity — creating jobs today while securing cleaner, cheaper power for the future.”
Why 2025 Is a Year to Watch Closely
2025 is a year of strong growth and big changes. India is moving more quickly than it did last year, prices are in check, and new policies are making things less expensive and encouraging spending. But global trade tensions, currency fluctuations, and high-speed tech changes mean that flexibility will be necessary — for governments, companies, and ordinary citizens.
2025 — A year of opportunity for the ready, and a trial by fire for the rest.
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Author: Anjali Pandey
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