Despite global trade shocks, India grew at its fastest pace in 6 quarters in 2025: RBI

Summing up the year 2025 from economic standpoint, the Reserve Bank of India has said despite global trade shocks, the Indian economy grew at its fastest pace in six quarters in 2025. Via its monthly bulletin for December 2025, the RBI has said the year brought about an unprecedented shift in global trade policies, marked by a move towards bilateral renegotiations on tariffs and terms of trade, and the Indian economy was not fully immune to the external sector headwinds. 

Notably, the Indian economy, supported by resilient domestic demand in Q2:2025-26, grew at its fastest pace in the last six quarters. The country’s current account deficit (CAD) also moderated in Q2:2025-26 over the same period last year, supported by a lower merchandise trade deficit, robust services exports, and strong remittance receipts.

Key highlights of the RBI’s monthly bulletin: 

1. The RBI says since ripple effects on global trade flows and supply chains are still unfolding, it has led to heightened “global uncertainties and concerns” about the prospects for global growth. 

2. As per the RBI, equity markets, on the other hand, remained ebullient during much of the year on Big Tech optimism, though concerns about high valuations have, of late, given rise to some risk-off sentiments in the equity markets. Portfolio flows to emerging markets are also witnessing a slowdown in recent months.

3. Coordinated fiscal, monetary and regulatory policies by global central banks have helped to build “resilience” over the year, said the RBI, adding that bolstered by strong domestic demand, the economic growth has been robust.

4. It also highlighted that “benign inflation outlook” also helped a lot by allowing space for monetary policy to support growth. “Continued focus on macroeconomic fundamentals and economic reforms should help unlock efficiencies and productivity gains to firmly keep the economy on the high-growth trajectory amidst a fast-changing global environment.”

5. The RBI says high-frequency indicators for November 2025 suggest that overall economic activity has held up with demand conditions remaining robust. Headline CPI inflation edged up but continued to remain below the lower tolerance level, it said. “Financial conditions remained benign, and the flow of financial resources to the commercial sector remained robust.”