India’s economic growth is set to rebound as domestic demand gains momentum, though persistent food inflation requires close monitoring, according to the latest RBI Bulletin released on Friday.

The January edition of the Bulletin, featuring an article on the “State of the Economy,” outlined a mixed global economic outlook for 2025. It highlighted slowing growth in the US, weak-to-modest recoveries in Europe and Japan, and moderate growth trajectories in emerging and developing economies. Disinflation in these regions is expected to progress more gradually than in advanced economies.

“In India, high-frequency indicators of economic activity showed an encouraging acceleration in the second half of 2024-25, aligning with the projected pick-up in real GDP growth outlined in the NSO’s annual first advance estimates,” the article noted.

While headline inflation eased for the second consecutive month in December, the report flagged the persistence of food inflation, cautioning against potential second-order effects that warrant vigilant monitoring.

Authored by a team led by Michael Patra, who stepped down as RBI Deputy Governor earlier this month, the article emphasised the resilience of rural demand driven by improved agricultural prospects. Public capital expenditure on infrastructure is also expected to bolster growth across key sectors.

However, rising input costs in manufacturing, weather-related challenges, and global economic headwinds could pose risks to this optimistic outlook, the article warned.

The central bank clarified that the views expressed in the Bulletin are those of the authors and do not necessarily reflect the stance of the Reserve Bank of India.

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