Blog Dhabkar News February 24, 2025 0 Comments

Global Economic Slowdown: 5 Alarming RBI Warnings on Inflation & Market Risks

The Reserve Bank of India (RBI) has expressed concerns about the global economic slowdown, citing growing volatility in financial markets, energy prices, and trade uncertainties. According to the latest India news, while core inflation remains stable, risks such as adverse weather conditions and market fluctuations could push inflation higher.

As per the RBI’s February Bulletin, external factors have created financial instability, particularly for emerging economies like India. The latest India news on trade also highlights the impact of trade tensions and reciprocal tariffs imposed by the US, making the global economic outlook more unpredictable.

Impact of the Global Economic Slowdown on Financial Markets

The global economic slowdown has led to significant disruptions in financial markets, affecting economies worldwide.

1. How the Global Economic Slowdown is Affecting Stock Markets

US and European markets have seen major fluctuations in equity prices and bond yields.
China’s recent economic slowdown resulted in a $1 trillion loss in global equity valuation in just one day.
Emerging markets have witnessed large capital outflows, putting pressure on their currencies.

2. India’s Response to the Global Economic Slowdown

Despite global challenges, India’s economy is showing resilience and is projected to be one of the fastest-growing economies in FY 2025-26, according to Moody’s.

3. Inflation Trends Amid the Global Economic Slowdown

Inflation fell to a five-month low in January 2025, mainly due to lower food prices.
A good Kharif harvest and favorable Rabi sowing are expected to stabilize food inflation further.

4. Domestic Demand and Government Measures

The Indian government and the RBI have implemented key measures to counteract the effects of the global economic slowdown:

The RBI’s February repo rate cut of 5% is expected to boost economic activity and consumer spending.
The Union Budget 2025 has allocated major funds to agriculture, MSMEs, and exports, ensuring sustainable growth.

Challenges Posed by the Global Economic Slowdown

Although India’s economic fundamentals remain strong, the global economic slowdown presents several challenges:

Trade Uncertainty: Rising tariffs and geopolitical tensions could impact India’s exports.
Energy Price Volatility: Fluctuations in global crude oil prices could increase inflationary risks.
Climate Risks: Extreme weather conditions could affect agricultural output, impacting rural incomes and food prices.

While the global economic slowdown remains a major concern, India’s economy is showing resilience. The repo rate cut, strong agricultural sector, increasing domestic demand, and foreign investment inflows indicate a positive economic trajectory.

However, policymakers must remain cautious about inflation risks and global trade uncertainties. Businesses, investors, and consumers must stay updated on economic developments to navigate these uncertain times effectively.

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