Global growth forecasts lowered, impacting US and India

The global economy is facing challenges as growth forecasts continue to be revised down. The OECD reports that world GDP growth is now predicted to be 3.1% for 2025, a decrease from earlier estimates. This slowdown is largely attributed to changes in U.S. trade policies and their effects on inflation and growth worldwide. Countries like Mexico and Canada are expected to be significantly affected. Canada’s projected growth for this year has been cut to 0.7%, while Mexico's economy is expected to shrink by 1.3%. The U.S. is also impacted but less severely, with growth expected at 2.2% in 2025. India's growth forecast has also been revised down to 6.4%, down 0.5 percentage points from the previous estimate. The situation is compounded by increased U.S. tariffs, which are reminiscent of those from the 1930s. These tariffs are seen as a major risk factor for growth both in the U.S. and globally. Investor sentiment is shifting, with many selling U.S. stocks. A recent Bank of America survey shows a significant decrease in investment in U.S. equities, marking the lowest allocation since mid-2023. Meanwhile, Asian fund managers are expressing cautious optimism towards markets like Japan and China. Despite these challenges, there are signs that Indian equities may recover. Analysts point to factors such as government stimulus and improving domestic conditions as indicators that the worst may be over for Indian markets. However, volatility is expected to continue, and investors are advised to be selective in their positions. In conclusion, while there are ongoing economic pressures, especially from trade policies and inflation, some markets show potential for recovery, though challenges remain ahead.