By Eric Vandenbroeck and co-workers

India’s Relations with its Rivals

India-Pakistan relations have been relatively calm since February 2021, when the two countries reached a truce to end cross-border violence along their disputed frontier bisecting Kashmir. But in 2024, a surge in terrorist attacks in Indian-administered Kashmir—violence that New Delhi tends to blame on Islamabad, and reported cases of cross-border firing generated concerns about fresh tensions.                                     

Meanwhile, India’s ties with China are taking an inverse trajectory. Relations between the two countries had been tense since a deadly 2020 clash along their disputed border, but last year brought a new deal that may create diplomatic space for more cooperation in the year ahead, likely in the commercial sphere.

With India grappling with numerous neighborhood challenges in 2025—from China’s latest inroads in Nepal to serious tensions with Bangladesh—it will have a strong interest in keeping relations calm with both rivals.

 

A Sri Lankan Exception?

For a good news story in 2025, look no further than Sri Lanka. President Anura Kumara Dissanayake, who took office in September, will look to buck the regional trend of mass movements for change that fail to consolidate democracy.

Bangladesh has struggled to restore democracy following last summer’s so-called Gen Z revolution. But in Sri Lanka, Dissanayake came to power in an election viewed by observers as free and fair, following mass protests in 2022 that prompted strongman Gotabaya Rajapaksa to step down and ushered in a brief period of rule by his ally Ranil Wickremesinghe.

Dissanayake vows to strengthen democracy and weaken corruption, and he has rejected the violent Marxist politics of his party’s past. Whether he succeeds (and he has his share of strong skeptics) will be another key question this year.

 

India’s Economic Path

India recovered well from the COVID-19 pandemic and has enjoyed impressive economic growth in recent years. It is the world’s fastest-growing major economy and is poised to become the fourth-largest economy overall in 2025.

But in 2024, long-standing obstacles—inflation, unemployment, and low private consumption rates—remained persistent, and GDP growth during the July-September quarter fell to 5.4 percent, a seven-quarter low that was well below many growth projections.

Indian officials insisted that the setback is temporary, arguing that reduced government spending during the 2024 national election campaign was a factor and that the economy will rebound. Still, New Delhi enters 2025 with some of its most pronounced economic challenges in years. How it tackles them will have major stakes for India—and for a global economy that counts on its contributions.

 

Do Trump and His Allies Pursue Retribution?

After running on an agenda of retribution against perceived political foes, Trump said this month in an interview with “Meet the Press” that he wants to turn the page. “I’m not looking to go back into the past. Retribution will be through success,” he said. But his actions tell a different story. He has already pursued legal action against media entities like ABC News and an Iowa pollster before taking office. On Capitol Hill, he’ll have allies in power places, with committee chairmanships and subpoena power to investigate. Will they use their power to settle scores for Trump?

 

 

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