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25% US tariff on India may not be the endpoint President Trump’s latest executive order, issued yesterday, confirmed his threat from Wednesday that India will be hit by a 25% tariff. That puts India on a higher rate than many of its Asian peers. (See …
1st August 2025
President Trump’s latest flurry of tariffs implies that the US effective tariff rate will rise to about 17%, from 2.3% last year. That is a little higher than we assumed and so presents modest downside risks to our forecast for global GDP growth and a …
The July PMI readings for most countries in Asia were subdued and we continue to expect activity in Asia’s export-oriented manufacturing sectors to struggle in the coming months. And with inflation set to stay low, we think that most central banks in the …
The 25% tariff that President Trump has announced will be applied to imports from India starting Friday would undermine India’s attractiveness as an alternative manufacturing hub to China, if it proved permanent. But bilateral negotiations are continuing, …
30th July 2025
Falling inflation has raised prospects of another repo rate cut next week But tone of communications suggests that easing cycle is now over We expect repo rate to remain on hold at 5.50% until well into 2026 The further sharp drop in headline inflation …
India is now home to some of the world’s largest financial markets, but foreign access remains limited. That will change over time as policymakers continue to liberalise the capital account, but it is likely to be a gradual process. The growth of India’s …
29th July 2025
We will be holding an online Drop-In next week to discuss the implications of recent US trade deals for regional supply chains, global fracturing, economic growth, and financial markets across Asia. To register click here . China’s hydropower project a …
25th July 2025
India’s economy has had a strong first half of the year and is poised to grow by 7% in both 2025 and 2026, making it a global outperformer. While inflation has continued to fall sharply, we expect it will rise steadily towards the RBI’s 4% target over the …
24th July 2025
India wants better deal than Indonesia & Vietnam President Trump’s comment this week that a trade deal with India was “close” but that it would be along the “same line” as the one announced on Wednesday with Indonesia raises the prospect that India could …
18th July 2025
Larger-than-expected drop in inflation puts August rate cut back on the table The larger-than-expected fall in India’s consumer price inflation to 2.1% y/y in June raises the prospect of the RBI cutting interest rates further at its policy meeting next …
14th July 2025
Sharp fall in June inflation could spur rate cut talk The major data release next week will be the consumer price inflation data for June – the last set of inflation numbers before the RBI’s next policy announcement on Wednesday 6 th August. We think the …
11th July 2025
Trump has confirmed that punitive tariffs on Asian countries will take effect on 1 st August unless trade deals are agreed by the end of the month. Despite the urgency, negotiations could prove difficult if, as some reports are indicating, the US is …
8th July 2025
Strong monsoon would boost economy The southwest monsoon this week fully covered India, around a week earlier than the historic norm. This raises the prospect of a bountiful kharif (monsoon) harvest, which bodes well for economic prospects in the second …
4th July 2025
The June PMI readings for most countries in Asia were subdued. With worries about growth having taken precedence over those about inflation, we think most central banks in the region will continue to loosen monetary policy and by more than most analyst …
1st July 2025
Conflicting reports cloud prospects of a trade deal President Trump on Thursday talked up the prospects of the US and India signing a “very big” trade deal ahead of the ending of the 90-day tariff reprieve on 8 th July. India has also sent a delegation of …
27th June 2025
India’s economy has had a strong first half of the year and is poised to grow by 7% in both 2025 and 2026, making it a global outperformer. The recent sharp drop in inflation has enabled the Reserve Bank of India to frontload its easing cycle and we think …
26th June 2025
India’s goods trade deficit with China is now at a record high. This largely reflects rising goods imports from China which, while bringing economic benefits in some areas, are also raising concerns over the threat posed to domestic industry. Given …
25th June 2025
Front-running fades but exports to US still strong We learnt this week that the goods trade deficit narrowed in May to c.$22bn, from c.$26bn in April. The breakdown shows that the front-running of exports to the US - evident prior to President Trump’s …
20th June 2025
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
13th June 2025
Our Q3 India Outlook This week we published our Q3 India Economic Outlook , which contains all of our latest analysis of India’s economy and financial markets. The forecasts and underlying data can also be viewed in our interactive India Macro Dashboard …
Headline inflation drops to 75-month low; has now bottomed out India’s headline consumer price inflation fell to a 75-month low of 2.8% y/y in May. Inflation may now have bottomed out, but we think it will rise only very gradually back towards the Reserve …
12th June 2025
Note: we will be online to discuss India’s macro and markets outlook and to take your questions at 9am BST/4.00pm SGT on Tuesday, 10 th June. Register for the event here . Overview – India’s economy has had a strong first half of the year and is poised …
9th June 2025
Rapid economic growth ≠ equity outperformance Data released this week suggest the economy has carried its recent momentum into Q2. Although May’s composite PMI output balance fell slightly, it remained firmly in expansionary territory. (See Chart 1.) This …
6th June 2025
The Reserve Bank of India’s (RBI’s) decision to cut the repo rate by a larger-than-expected 50bps (to 5.50%) while also changing its policy stance from “accommodative” to “neutral” today are clear indications that it has frontloaded the remainder of the …
RBI ends easing cycle with a bang The Reserve Bank of India’s (RBI’s) decision to cut the repo rate by a larger-than-expected 50bps (to 5.50%) while also changing its policy stance from “accommodative” to “neutral” today are clear indications that it has …
India’s stock market has fared well this quarter, outperforming other emerging market equities in aggregate, but we doubt this bout of outperformance will last in the near term. The good times seem to be back for India’s stock market, after a few months …
5th June 2025
Higher GDP forecasts for 2025 and 2026 Data released today confirmed that the economy got off to a strong start in 2025 – GDP growth rose to 7.4% y/y, from 6.4% y/y in Q4 2024 (revised up from 6.2%). (See here for our Data Response .) Looking ahead, it’s …
30th May 2025
Economy grew at a rapid pace in Q1 GDP figures for Q1 2025 show that India’s economy grew at a robust pace at the start of the year and we think that growth may remain strong over the coming quarters as lower interest rates filter through into the economy …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
Falling inflation, downside risks to growth to prompt another cut to repo rate next week Another 25bp cut to 5.75% seems most likely Consensus has caught up to our long-held view of 100bps of cuts in this cycle With headline inflation now at a …
Debate around whether or not India’s economy has surpassed Japan’s in size is raging, but the big picture is that India was always going to overtake Japan – and also Germany – given its positive demographics and scope for continued productivity gains. So …
28th May 2025
RBI to transfer record dividend The RBI today announced a dividend transfer of INR2.7trn (US$34bn, 0.8% of GDP) to the Finance Ministry for FY24/25 (which ended in March). This is a record amount in both INR terms and relative to GDP, and exceeds the …
23rd May 2025
India’s economy is emerging from its soft patch. Headline CPI inflation should remain close to the RBI’s 4% target over the coming months, enabling the central bank to continue easing monetary policy. We’re expecting a further 50bp of cuts to the repo …
22nd May 2025
Core inflation in India rose to an 18-month high in April, but there are reasons to think that this overstates the extent to which the economy is running into capacity constraints. And with headline inflation at a multi-year low, further policy easing …
21st May 2025
A deal is perhaps not so imminent Optimism that India was poised to seal a quick trade deal with the US has faded in the past week. Admittedly, Donald Trump still sounds positive about the negotiations – he claimed yesterday that India had offered a “no …
16th May 2025
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
Inflation at six-year low strengthens case for more interest rate cuts The slight fall in India’s consumer price inflation in April, which pushes it further below the Reserve Bank of India’s (RBI’s) 4% target, supports our view that the central bank will …
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
Market jitters, but limited economic impact News this week has been dominated by the fallout from India’s strikes on suspected terrorist camps in Pakistan in retaliation to the 22 nd April attacks in Pahalgam. This has sent a few jitters through financial …
9th May 2025
If limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the economy of either country. Pakistan would have more to lose than India from a broader conflict, though that would also risk reversing the …
7th May 2025
Exporters relatively well-placed to benefit US Treasury Scott Bessent said this week that “India would be one of the first trade deals we [the US] would sign”, brightening the prospects of India avoiding large tariffs once the 90-day reprieve comes to an …
2nd May 2025
A robust monsoon this year – as predicted by experts – wouldn’t have as big an impact on India’s economy as it would have had a couple of decades ago. But it could boost employment and energy production. What’s more, it would anchor prices of key crops …
30th April 2025
India’s economy is emerging from its recent soft patch. Headline CPI inflation should remain close to the RBI’s 4% target over the coming months, enabling the central bank to continue easing monetary policy. We’re expecting a further 50bp of cuts to the …
29th April 2025
Parts of South East Asia, notably Vietnam, as well as India are well placed to immediately gain market share in response to penal US tariffs on Chinese imports. But uncertainty over the future tariff landscape will deter investment in additional capacity …
Provided it was limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the overall economy of either country. The closing of the only land trade route is also largely symbolic – bilateral trade was …
28th April 2025
Trump policies may be levering India towards US US Vice President JD Vance hailed “very good progress” on a potential trade deal between Washington and New Delhi during his visit to India this week, and prospects do appear to have brightened with the two …
25th April 2025
Pharmaceuticals tariffs incoming A US import levy on pharmaceuticals would be a blow to India’s economy but far from a fatal one. Admittedly, India has been dubbed the “pharmacy of the world” and its success in the industry has helped its pharmaceuticals …
17th April 2025
Further fall in inflation paves way for more interest rate cuts The larger-than-expected fall in Indian consumer price inflation in March, which pushes it further below the Reserve Bank of India’s (RBI’s) 4% target, reinforces our view that the central …
15th April 2025
