Page 10 - FIPI - Policy Economic Report - May 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

China’s growth is expected to slow to 4.6 per cent this year, reflecting subdued consumer sentiment,
disruptions in export-oriented manufacturing and ongoing property sector challenges. Several other
major developing economies, including Brazil, Mexico, and South Africa, are also facing growth
downgrades due to weakening trade, slowing investment, and falling commodity prices. India, whose
2025 growth forecast has been revised downward to 6.3 per cent, remains one of the fastest growing
large economies.

For many developing countries, this bleak economic outlook undermines prospects for creating jobs,
reducing poverty, and addressing inequality. For least developed countries—where growth is expected
to slow from 4.5 per cent in 2024 to 4.1 per cent in 2025—declining export revenues, tightening
financial conditions and reduced official development assistance flows threaten to further erode fiscal
space and heighten the risk of debt distress.

According to the World Economic Situation and Prospects, escalating trade frictions are further straining
the multilateral trading system, leaving small and vulnerable economies increasingly marginalized in a
fragmented global landscape. Strengthening multilateral cooperation is essential to address these
challenges. Revitalizing the rules-based trading system and providing targeted support to vulnerable
countries will be critical to fostering sustainable and inclusive development.

3. AI needs more abundant power supplies to keep driving economic growth- IMF

Artificial intelligence is an emerging source of productivity and economic growth that is also reshaping
employment and investment. According to IMF, AI has the potential to raise the average pace of annual
global economic growth.

AI, however, needs more and more electricity for the data centres that make it possible. The resulting
strain on power grids has major implications for global electricity demand.

The world’s data centres consumed as much as 500 terawatt-hours of electricity in 2023, according to
the most recent full-year estimate by the Organization of the Petroleum Exporting Countries. This could
triple to 1,500 terawatt-hours by 2030 for OPEC projects.

According to IMF, electricity used by data centers alone, already as much as that of Germany or France,
would by 2030 be comparable to that of India, third world’s largest electricity user. This would also
leapfrog over the projected consumption by electric vehicles, using 1.5 times as much power than EVs
by the decade’s end.

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