Trump, rupee and economic growth: What's in store for India in 2025?
Indian economy in 2025. While the outlook remains optimistic, the report, authored by Radhika Rao Senior Economist, DBS Bank and Philip Wee, Senior FX Strategist, DBS Group, highlights both structural strengths and cyclical headwinds.
Trump 2.0 and its implications for India
One of the key global factors influencing India’s outlook is the potential return of Donald Trump to the U.S. presidency. DBS Bank notes that heightened U.S.-China tensions under Trump 2.0 could lead to increased financial market volatility, impacting global and Indian markets alike.
“The first line of impact will be passthrough of financial market volatility, with sharp swings in U.S. Treasury yields and the dollar likely to pile pressure on Indian assets and flows,” the report states. While India’s rupee has recently hit new lows, the currency’s relatively low sensitivity to U.S. Treasury moves provides some insulation.
DBS Bank also underscores India’s strategic advantages in such a scenario. With deeper export and investment linkages to the U.S. than China, India stands to benefit from its strong trade ties. “The U.S. is India’s largest goods and services export destination, followed by the EU,” the report adds. Furthermore, India’s strengths in sectors like agriculture, chemicals, and textiles could help it maintain robust trade with the U.S.
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