Indian Ship Steady Despite Turbulent Global Seas: RBI

Prolonged trade uncertainty, increasing protectionism can hit economy, central bank warns

- Rhik Kundu

Despite rising global risks from trade tensions and geopolitical conflicts, India's economy remains resilient, with key sectors maintaining momentum, the Reserve Bank of India (RBI) said in its latest State of the Economy report released on Wednesday.

The central bank, however, warned that prolonged trade policy uncertainty and increasing protectionism could leave a lasting impact on the global economy.

"High-frequency indicators for May 2025 point towards resilient economic activity in India across the industrial and services sectors," the RBI said, highlighting the economy's relative stability amid external headwinds.

The report, published as part of the RBI's monthly bulletin, flagged deepening geopolitical tensions as a key downside risk to already fragile global growth.

The RBI warned that a further deterioration in the global environment could undermine trade flows and financial stability.

"The intensifying geopolitical tensions too may further debilitate the already weakened growth impulses," it added.