How Shakespeare captured this year’s economic themes more than four centuries after he wrote his plays

In Julius Caesar, Cassius tells Brutus, ‘Why, man, he doth stride the narrow world like a Colossus, and we petty men….’ The man who bestrode the world this year was Donald Trump, who unsettled everyone each time he spoke of US tariffs. While game theory would have urged countries to collaborate on a pushback, with the exception of India and China, we saw wide acceptance.

His influence extended to another theatre: markets. But the latter coined the term ‘Taco,’ short for ‘Trump always chickens out.’ If there was method here, it was probably leveraged by market players who took Banquo’s words in Macbeth as advice to ‘look into the seeds of time, and say which grain will grow and which will not.’ Investors could have used stock indices battered by Trump’s announcements as buying opportunities for big money to be made after a chickening-out reversal of steep tariffs that would send prices back up.

The arclights of 2025 were also on the US Federal Reserve’s chair, Jerome Powell, who was harangued all through the year by the White House for not lowering rates as fast as it wanted. Given the inflation threat of tariffs, he held off till September. In this sub-plot, Powell could have echoed Caesar: ‘But I am constant as the northern star.’ Inflation in the US is above the Fed’s 2% target, but we can expect further rate cuts.

Modest oil-price volatility, despite high global uncertainty and wars in Ukraine (for which Russian oil faced a sanction squeeze) and West Asia (where hostilities between Israel and Hamas in Gaza spread briefly to Iran) was another story of 2025. Forecasts for Brent crude started at $80-plus per barrel, but oil prices settled in the low $60s. As Brutus would have said, fears of an oil surge blew past ‘as the idle wind.’

Then, there was the 2025 gold rush, driven by market uncertainty and investors moving in droves to what is seen as a safe-haven asset. Led by demand, the metal’s price rose remarkably.

Central banks bought more bullion as part of their reserve diversification plans. ‘All that glisters is not gold,’ we learnt from the bard’s Merchant of Venice, but paper gold sparkled too as the yellow metal’s price soared and drew investment into all forms of it, material or demat, in search of gains. Silver was a collateral beneficiary of this exuberance.

And then there was the curious case of the rupee. With the US dollar falling against a basket of global currencies, India’s currency should have risen. But capital market outflows and the absence of a trade deal with the US made the rupee volatile. The forex market was looking for directions from the central bank, but none was forthcoming.

An observable lack of support for the rupee through volatility-reducing central-bank intervention acted as a trigger for further depreciation. Our currency slid to a new level of ₹91 a dollar before it was shored up. But it remains unclear if and when it will fall further.

Foreign portfolio inflows have been uncertain and a US trade deal is still awaited. It is almost as if India’s central bank has been echoing Marc Antony in Julius Caesar by appearing to tell the rupee, ‘Take thou what course thou wilt.’

The year’s bond yield movements were idiosyncratic. A lowered repo rate by and large got translated into lower lending and deposit rates. The short-tenure end of the bond yield curve too reacted with spontaneity. However, the 10-year bond yield remained stubborn.

At times, cautious statements made by the central bank held it up. After its June policy review, for example, it had signalled no further foreseeable rate cuts. In December, it cut the repo rate and stated that open market operations would deal with liquidity, which perked up yields. But this only reflects market expectations. As Hamlet says in the play by that name, ‘For there is nothing either good or bad, but thinking makes it so.’

That brings us to domestic inflation. It came down to a stunningly low 0.3% during 2025 and looks likely to hover at a level under 1% in December too. But households, ironically, still complain of tomatoes costing ₹60 per kg. But then, as observed in Macbeth, perhaps ‘fair is foul and foul is fair.’

India’s GDP growth came in at 8.2% for the second quarter of 2025-26. This exceeded even the most hearty forecast, but critics lamented our nominal GDP growth of just 8.7%, which quickly became a discussion point. Nothing seems to please all economists. As Troilus in Troilus and Cressida says, ‘How my achievements mock me!’

To round off, this was the year that US tariff-provoked doomsday forecasts fell apart. There was no global trade war and India’s exports and GDP did not decline. Nor did high inflation push the US into a recession. Crude oil prices did not skyrocket.

As we approach the New Year, the world economy looks far from fragile. It is set to grow by 3.2% in 2025, as per IMF projections, with the US logging growth of 2%. India’s 2025-26 growth could be 7.3%. Tariffs or not, life goes. As for doomsday economists, as Macbeth says, ‘And be these juggling fiends no more believed.’ On this note, let’s hope for a happy new year!

These are the author’s personal views.

The author is chief economist, Bank of Baroda, and author of ‘Corporate Quirks: The Darker Side of the Sun’.