As the global economy adapts to a fast-changing landscape, the second half of 2025 is set to usher in new opportunities—and risks—for investors, entrepreneurs, and policymakers. From startup resurgence to cooling inflation and shifting investment patterns, economic indicators are sending strong signals about what lies ahead.

We’ve compiled the top 7 economic trends that will shape India’s and the global economy in H2 2025, backed by market data, analyst commentary, and a forward-looking outlook.

1. Startup Momentum Makes a Strong Comeback

After a subdued 2023–2024 period due to funding winter and macroeconomic uncertainty, the Indian startup ecosystem is poised for revival.

According to Tracxn, Q2 2025 witnessed a 40% surge in early-stage funding compared to the same period last year. Sectors like climate-tech, deeptech, and healthtech are emerging as investor favorites.

“We’re seeing renewed VC activity, especially in clean energy startups. Climate-focused innovations are receiving backing not just from private equity but also from global impact funds,” says Ananya Mehta, Partner at GreenSeed Ventures.

The government's continued push through Startup India and state-specific incentives has also boosted the creation of new unicorns and MSMEs.

2. GDP Growth Holds Steady Amid Global Volatility

India’s GDP growth is expected to stabilize at 6.8%–7.2% in H2 2025, according to projections from the Reserve Bank of India (RBI). While the global environment—especially China’s slowing recovery and US interest rate decisions—casts some uncertainty, India’s domestic consumption remains strong.

Key drivers:

• Recovery in manufacturing and construction

• Growing exports in sectors like pharma and electronics

• Higher rural spending post a favorable monsoon season

“The Indian economy is proving resilient, supported by structural reforms, strong infrastructure spending, and a healthy credit cycle,” says Deepak Rawat, Economist at Axis Securities.

3. Inflation Cools but Core Pressures Remain

After peaking in late 2023, inflation in India has shown a downward trend in 2025. CPI inflation stands at 4.3%, within the RBI’s comfort range. Key contributors include lower food prices, improved logistics, and global energy price stability.

However, core inflation—excluding food and fuel—remains sticky around 5%, driven by housing, healthcare, and services.

“We expect the RBI to maintain a cautious stance. While headline inflation is under control, services-led inflation will need close monitoring,” notes Swati Bansal, Senior Macro Analyst at Motilal Oswal.

4. Sustained Rise in Retail and Institutional Investments

The equity markets have seen robust participation from both domestic and foreign investors. Mutual fund SIPs hit an all-time high in May 2025, averaging ₹18,000 crore/month.

FPIs (Foreign Portfolio Investors) have also returned in a big way, with net inflows crossing $8 billion in Q2 alone.

Sectors attracting capital:

• Green energy and EVs

• Banking & NBFCs

• Technology and SaaS

• Consumer durables

“India's demographic dividend and tech-driven innovation remain strong long-term stories for global investors,” says Ravi Khatri, Fund Manager, Franklin Templeton India.

5. Manufacturing and Exports Gain Global Spotlight

India’s push for Atmanirbhar Bharat and Production Linked Incentive (PLI) schemes continues to pay off. The country has emerged as a competitive alternative to China in electronics, pharma, and textiles.

With supply chain diversification underway globally, exports grew 9.2% in Q2 2025, led by electronics, auto components, and processed foods.

“India's cost advantage, improving logistics, and digital customs systems are enhancing export competitiveness,” remarks Richa Ghosh, Trade Economist at Deloitte India.

6. Digital Economy Expands into Tier-2 and Tier-3 India

Digital consumption is booming in smaller towns. With rising smartphone penetration and improved digital infrastructure under BharatNet, tier-2/3 cities account for over 50% of digital transactions in 2025.

Growth indicators:

• Fintech and UPI penetration in rural belts

• E-commerce expansion beyond metros

• Surge in local-language content consumption

This transformation is drawing the attention of fintech startups and big tech alike.

7. Green and Sustainable Investments Take Center Stage

ESG (Environmental, Social, Governance) investing is no longer a niche. Sustainable funds have seen a 60% YoY rise in AUM, as investors prioritize climate-conscious portfolios.

Major corporates are aligning with India’s Net Zero 2070 goals, with disclosures on emissions, water use, and social impact gaining traction. Green bonds issuance has also doubled in the first half of 2025.

“ESG is now seen as essential risk management. It's a sign of operational resilience and long-term value,” says Nidhi Arora, ESG Specialist at CRISIL.

Investor Outlook for H2 2025

The second half of 2025 presents a cautiously optimistic outlook. While geopolitical risks and Fed rate moves will need close attention, India remains one of the most promising growth markets globally.

Investment themes to watch:

• Mid-cap and small-cap equities

• EV and green tech startups

• Digital lending and NBFCs

• Export-linked manufacturing firms

Diversification, discipline, and a long-term horizon will be key to navigating this dynamic economic landscape.

Final Thoughts

The rest of 2025 offers a nuanced mix of promise and challenge. Whether you're a retail investor, startup founder, or policy strategist, these top 7 economic trends can help guide smarter decisions in a complex macro environment.