The global economy is at a crossroads as the Donald Trump-led US administration is moving forward with its decision to impose higher tariffs on imports. This protectionist stance, per economists, is expected to disrupt global trade flows, strain supply chains, and slow economic growth worldwide. While emerging markets are expected to face short-term volatility, India is forecasted to remain resilient, driven by strong domestic demand and ongoing structural reforms. While sectors reliant on exports to the US may feel the impact, India’s broader economy is expected to sustain its growth trajectory. Meanwhile, per Crisil, India’s real gross domestic product (GDP) growth is expected to be steady at 6.5 per cent in fiscal 2026. This will be despite uncertainties stemming from geopolitical turns and trade-related issues led by tariff actions by the US.
The uncertainty will also affect the US economy hit by Trump’s trade policy. While the newly elected US president intends to protect domestic industries with his ‘reciprocal tariffs’, these are likely to drive up costs for American businesses that rely on imported raw materials and goods, leading to higher consumer prices and inflationary pressures. Economists opined that with the US already grappling with a high fiscal deficit, these trade disruptions could further slow economic growth, weaken investor confidence, and push the economy closer to a recession. Earlier, a JP Morgan economist said that there is about a 40 per cent chance of a US recession this year and a risk of lasting damage to the country’s standing as an investment destination. “Where we stand now is with a heightened concern about the US economy,” Reuters reported as Bruce Kasman, JP Morgan’s Chief Global Economist, told reporters in Singapore.
In context of this, Harsh Goenka, Chairman of the RPG Group, in a post on X (formerly Twitter), listed Investor and writer Ruchir Sharma’s top 10 trends for 2025:
- Recent trend of US markets dominating global markets would reverse;
- US is having very high fiscal deficit, which would need correction and impact its growth;
- US’s image as an exceptionally attractive investment destination would get diluted;
- Emerging markets would perform better;
- China has become ‘investible’ again due to attractive valuations;
- In the Indian markets, outperformance of small and mid caps unlikely to continue;
- Overspending in AI would hurt big tech companies;
- Trade would grow without US, driven by bilateral arrangements;
- Private funding (private equity and private debt) would slow down globally. India may not get impacted being at a relatively nascent stage;
- No magic solution to obesity likely.