Page 4 - Policy Economic Report - December 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Executive Summary

2025 has been a year of steep ups and downs for the global economy—at least where growth forecasts
have been concerned. According to World Bank estimates, global growth is projected at 2.7 percent—
broadly in line with expectations at the start of the year.

In 2025, the United States experienced the largest swing in growth expectations among the major
economies, with forecasts falling from 2.2 percent in January to 1.2 percent in May before recovering to
2.0 percent by November. This rebound reflected strong AI-related investment, lower interest rates,
continued fiscal support, and modest tariff pass-through.

Across other advanced economies, projected growth has returned to 1.4 percent—up from 1.0 percent
in May and close to January levels—with the euro area benefiting from easing inflation, declining interest
rates, and targeted fiscal measures. Growth prospects for EMDEs excluding China have remained stable
at around 3.5 percent, while expectations for China have improved as policy support helped offset
weakness in the real-estate sector.

In case of India, as per the latest data released by NSO, the real GDP of India, adjusted for inflation, is
estimated to grow by 8.2% in Q2 of FY 2025-26 against the growth rate of 5.6% during Q2 of FY 2024-25.
The GDP in Q1 of FY 2025-26 grew at 7.8% against the growth rate of 6.5% during Q1 of FY 2024-
25. Nominal GDP has witnessed a growth rate of 8.7% in Q2 of FY 2025-26.

The surge is supported by resilient domestic demand, moderating inflation, and higher labor force
participation. A revival in domestic investment and strong investor sentiment signals a stable and broad-
based economy. As reforms gather pace and consumption remains optimistic, India’s economic outlook
continues to upbeat, signaling sustained momentum and growth across sectors.

Primary sector experienced the year-on-year Real GVA growth rate of 3.1% in Q2 FY 2025-26. Similarly,
the Secondary (8.1%) and Tertiary Sector (9.2%) have boosted the Real GDP growth rate in Q2 of FY 2025-
26.

IIP measures growth in manufacturing, mining, and electricity, reflecting the strength of industrial activity.
India’s IIP registered a robust growth of 4.0 % year on year in September 2025, driven primarily by a 4.8
% expansion in the manufacturing sector. A rising IIP signals robust production, higher employment, and
stronger investment momentum, reinforcing the economy’s overall growth trajectory.

Headline inflation-: Year-on-year inflation rate based on All India Consumer Price Index (CPI) for the month
of November, 2025 over November, 2024 is 0.71% (Provisional). There is increase of 46 basis points in
headline inflation of November, 2025 in comparison to October, 2025.

Year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) for the month of
November, 2025 over November, 2024 is - 3.91% (Provisional). Corresponding inflation rates for rural and
urban are – 4.05% and -3.60%, respectively. All India inflation rates for CPI (General) and CFPI over the
last 13 months are shown below. An increase of 111 basis points is observed in food inflation in November,
2025 in comparison to October, 2025.

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