Mumbai, February 21st, 2025: The research report titled ‘Macro Outlook 2025’ prepared by 1 Finance highlights the comprehensive analysis across asset classes, focusing on key themes that will shape investment opportunities in 2025.
KEY TAKEAWAYS:
India’s economic growth took a hit because of several domestic and external factors like high and volatile food inflation, weak consumption demand, low employment generation, and low global growth. However, several positive catalysts emerged like strong credit growth, bond market inflows from FPIs and consistent inflows from domestic investors.
As we progress through 2025, India is poised to become the world’s fourth-largest economy, surpassing Japan’s $4.1 trillion GDP, though significant per capita differences remain. Below are a few factors that are working in India’s favour:
● Food inflation is moderating with strong agricultural output expected
● Rural consumption is recovering, supported by good monsoons and falling agri input costs
● The manufacturing sector shows readiness for capex with healthy balance sheets
● Global growth, projected at 3.3% by the IMF, offers a marginal improvement over 2024’s 3.2%, despite rising protectionist pressures
INDIA POISED TO ENTER ‘RECOVERY’ MODE:
We predict that there is a 60% probability of the Indian economy transitioning from the current ‘Slowdown’ phase, which has been transitory rather than structural, into ‘the Recovery’ phase.
The 1Finance Macroeconomic Index (1FMI) remained stable in 2024, reflecting economic resilience despite a transitory slowdown. Robust services sector growth offset marginal manufacturing sluggishness, while cooling inflation and strong public capex coupled with increased rural demand signals a pivot toward sustainable growth.
2025: THE YEAR TO DIVERSIFY ACROSS ASSET CLASSES:
The risks of remaining concentrated in select asset classes will become apparent in 2025. The biggest focus will be on governments’ fiscal policies, central banks’ monetary decisions, household consumption, and resolution of geopolitical issues.
Emphasizing on the importance of the research, Mr. Animesh Hardia, Senior Vice President, Quantitative Research at 1 Finance adds, “Our inaugural Macro Outlook 2025 aims to democratise world-class research that has traditionally been available only to large financial institutions. While macroeconomic events shape our daily lives – from interest rates on home loans to job opportunities – accessing quality research remains challenging for most Indians. This outlook provides directional guidance to help readers build diversified portfolios that can weather market cycles and align with their long-term financial goals.”
FINANCIAL PLAN FOR 2025:
As we enter a period of significant economic transitions – from rate cuts to shifting global trade conditions – your financial decisions require careful consideration. A Qualified Financial Advisor can provide a comprehensive assessment of your financial situation:
● Evaluating loan refinancing opportunities as interest rates shift
● Protecting your purchasing power when the dynamics of inflation change
● Balancing exposure between large caps and mid/small caps given the valuation divergence
● Optimising fixed income allocation ahead of expected rate cuts
● Assessing gold allocation as a hedge against market volatility
CONCLUSION:
While uncertainties around global trade policies and monetary easing could create market volatility, India’s strong domestic fundamentals and policy continuity provide a stable foundation for growth. The focus should remain on careful asset allocation and risk management as markets negotiate these transitions.