RBI maintains repo rate at 6.5%, projects 7.2% GDP growth and 4.5% inflation for FY25, IMF targets $55 Trillion economy by 2047

The global economy showed positive signals in October with notable improvements in the US, Japan, and India. Key economic indicators provide insight into market trends and future growth expectations.

The US trade deficit narrowed to USD 70.4 billion in August 2024, marking the lowest level in five months. This improvement follows an upwardly revised trade deficit of USD 78.9 billion in July. The reduction in the deficit suggests a boost in exports or a decrease in imports, contributing to a healthier balance of trade for the US economy. As the global trade environment stabilizes, this trend could further support the recovery of the US economy.

In another positive sign for the US, the TIPP Economic Optimism Index increased by 0.8 points to 46.9 in October 2024. This marks the highest level since April 2023, just shy of market expectations of 47.2. The rise in economic optimism reflects growing consumer and investor confidence, even as inflationary pressures and interest rate concerns persist.

Japan’s Reuters Tankan sentiment index for manufacturers showed a marked improvement in October, rising to 7 from 4 in September. The rise indicates growing business confidence among Japanese manufacturers, which is a positive sign for Japan’s economy. However, concerns about the strength of China’s economic recovery continue to cloud the outlook, particularly for export-driven sectors.

In India, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.5%, while shifting its policy stance to “neutral” from “withdrawal of accommodation.” This move signals the central bank’s balanced approach towards managing inflation while supporting growth.

The RBI also reaffirmed its projections for FY25, maintaining its forecast for real GDP growth at 7.2% and CPI inflation at 4.5%. The steady outlook reflects confidence in India’s economic resilience amid global uncertainties.

International Monetary Fund (IMF) Executive Director KV Subramanian has urged Indian states to play an active role in implementing economic reforms to help India achieve its ambitious target of becoming a USD 55 trillion economy by 2047. This call emphasizes the importance of coordinated efforts across both national and state levels to drive growth and development.

The global economic landscape is showing signs of resilience as the US trade deficit narrows, optimism rises, and Japan’s business sentiment improves. In India, the RBI’s steady stance on interest rates and positive growth projections further highlight the country’s economic strength. However, challenges such as China’s economic recovery and inflation risks remain key factors to watch moving forward.