Key global and Indian economic themes for the new year

Five critical economic themes will shape India and global policies for 2025 and beyond

- MADAN SABNAVIS

As we step into 2025, five crucial economic themes will dominate the global landscape. These themes, with their respective sub-themes, will shape the global economy over the year, even as the world remains in a state of flux. While global growth is expected to be steady, decisions made in the West and China will have significant repercussions on other economies, particularly emerging markets like India.

US Policy Approach
The first theme is the policy approach of the United States, which remains a key driver in global economic affairs. Despite the decreasing level of globalization, where nations interact more as individual players than as one cohesive group, the shadow of the USA looms large over every corner of the world. This influence is not just about warnings against de-dollarization or the imposition of tariffs but also about the broader economic policies that a new US President may initiate. These policies will inevitably affect countries worldwide, particularly through trade relations, inflation, and fiscal policies.

Donald Trump, who has made his economic stance clear during his election campaigns, is expected to implement many of his proposals. His position on migrant labor, for instance, could lead to a labor shortage in the US, pushing wages higher and fueling cost-push inflation. Additionally, his plan to cut taxes for corporations, although designed to stimulate investment, will likely increase the US deficit and borrowing, resulting in higher interest rates and global inflationary pressure.