Global Growth Remains Fragile, But Indian Economy Shows Resilience: RBI

A significant turning point came after US President Donald Trump announced a 90-day suspension of reciprocal tariffs on April 9, exempting all countries except China

The automobile sector displayed mixed performance in April, according to the RBI bulletin

Source : PTI

The Reserve Bank of India (RBI), in its monthly bulletin released in May, stated that the global economic outlook remains fragile despite recent relief from trade tensions. While the United States’ decision to temporarily pause new tariffs has offered some reprieve, broader concerns, such as ongoing trade disputes, rising policy uncertainty, and subdued consumer sentiment, continue to cloud the global growth forecast.

According to the bulletin, the Indian economy, in contrast, is displaying notable resilience in the face of these external challenges. Despite elevated trade and tariff-related uncertainties, India’s economic activity has maintained momentum, the RBI noted. It highlighted that a range of high-frequency indicators from the industrial and services sectors continued to show positive trends through April, signaling sustained recovery and growth.

A significant turning point came after US President Donald Trump announced a 90-day suspension of reciprocal tariffs on April 9, exempting all countries except China. The decision followed a steep market selloff triggered by his earlier tariff announcement on April 2, which included a 26 per cent duty on Indian exports. The pause helped calm investor nerves and was seen as a temporary but important boost to market confidence.

Auto Sector

The automobile sector displayed mixed performance in April, according to the RBI bulletin. Wholesale vehicle sales declined by 13.3 per cent compared to the same month last year, a drop largely attributed to the high base effect, which particularly impacted two-wheeler sales.

On the other hand, tractor sales continued to register healthy growth, although the rate of expansion moderated slightly. Meanwhile, overall vehicle registrations increased by 2.9 percent year-on-year. Notably, the transport vehicle segment recorded its strongest growth in six months, signaling a rebound in demand for commercial mobility solutions.

The RBI bulletin further reported that this combination of improving domestic indicators and the easing of international trade tensions contributed to a notable recovery in Indian financial markets by mid-April. After an initial dip in early April, domestic equity markets rebounded strongly. The rally was supported by encouraging fourth-quarter earnings from key banking and financial sector firms, which helped lift investor sentiment.