Global GDP remained steady at 3.3% in FY2026, but the recovery was uneven across regions. The United States (the US) acted as a primary engine, growing 2.2%, fuelled by investment in artificial intelligence (AI) and a strong services sector. In contrast, Europe and China continue to face structural stagnation with slower industrial recovery and subdued manufacturing activity. Furthermore, the global supply chains witnessed a fundamental shift from efficiency-driven "Just-in-Time" to resilience-led "Just-in-Case" models. This transition is resulting in more localised and expensive global supply chains, while reshaping global trade dynamics.
Monetary Policy Pivot and "Sticky" Inflation
Global headline inflation eased to 3.8% in CY2025, prompting central banks to pivot from aggressive tightening to gradual rate cuts. However, massive sovereign debt, driven by defence and tech subsidies, combined with persistent geopolitical tensions in the Middle East, Ukraine, and Venezuela are disrupting energy supplies and driving volatility in commodity prices, pushing up prices. Given the scenario, the interest rates are unlikely to return to the ultra-low levels of the past decade. This new monetary paradigm necessitates agile financial strategies and selective capital allocation, particularly for long gestation sectors.
The "Tariff Shock" and Manufacturing Uncertainty
Global manufacturing is currently navigating a fine line between expansion and contraction with purchasing managers' indices (PMIs) hovering near the expansion/contraction boundary. Rising protectionism and aggressive US tariff hikes (with some metals facing 50% duties) have disrupted traditional trade routes and have increased costs for global hubs like Mexico, Brazil and Vietnam. It has created a climate of policy uncertainty that is weighing on global capital expenditure and trade volumes.
Indian Economic Scenario
World-Leading Growth Momentum
India continues to outperform as the fastest-growing major economy, with FY2026 GDP growth projected at 7.5%. Various reports estimate FY2027 GDP growth in the range of 6.4%-6.9%, positioning India as an outlier amidst a broad-based global slowdown. This resilience reflects tailwinds, including powerful domestic demand, massive government infrastructure spending, and a successful push towards becoming a global electronics and renewables manufacturing alternative as a part of the 'China+1 strategy'.
Stable Inflation and Monetary Comfort
Unlike many Western peers, India's retail inflation remained relatively benign, declining to multiple-year low of 2.75% in January 2026, before rising due to increased food and energy prices. This stability has allowed the RBI to maintain a neutral-to-easing monetary stance, keeping the repo rate steady to support growth. This period of high growth alongside low inflation provides a supportive macroeconomic backdrop. While geopolitical tensions pose a risk to oil import costs, India's expanding network of bilateral trade agreements (like the 2026 India-EU Free Trade Agreement) is helping to insulate the domestic economy from external price shocks.
Structural Resilience Against Trade Wars
While global trade is slowing due to the US tariffs, India is partially insulated due to its low external leverage and shifting export focus. By signing new trade frameworks and attracting foreign inflows into its sovereign bond markets, India has managed to support the rupee despite global dollar strength. The manufacturing sector remains a standout, with the PMI averaging above 56 through most of the year and peaking to 59.3 in August 2025, fuelled by domestic consumption even as global export orders faced tariff-related friction.
Metal Sector Overview and Outlook
The metals and mining sector in FY2026 was defined by a shift towards selective growth and structural change rather than a broad industrial boom. While global GDP growth remains steady at around 3.3% for FY2026, the industry navigated a complex landscape of geopolitical tension, supply chain restructuring and shifting policies, particularly from China's 15th Five-Year Plan and the US trade manoeuvres.
On the demand side, the transition to a low-carbon economy continues to reshape metals consumption landscape. Further, as China moves away from infrastructure-heavy stimulus towards a consumption-based economy, metals demand is increasingly tied to high-tech sectors like AI infrastructure, electrification, and renewable energy. This has created a "split" market where energy transition critical metals (copper for its role in the power grid, silver for solar panels and zinc for galvanisation) and precious metals (gold as safe haven) are outperforming. Silver's designation as a critical mineral in the US, combined with its dual identity as both an industrial input and a safe-haven asset, led to a significant rally in FY2026, reinforcing its status as one of the most compelling commodities of the current cycle. Meanwhile, traditional materials like iron ore faced downward pressure as new supply entered the market and Chinese steel production cooled.
On the supply side, major mining companies are maintaining strict capital discipline, prioritising shareholder dividends and strategic acquisitions over the risky greenfield development of new mines. This cautious approach, combined with the real-world integration of AI to improve processing efficiency, keeps supply structurally tight for critical minerals. While battery metals like lithium and cobalt are seeing price rebounds driven by supply constraints and trade disruptions, the overall market is characterised by high volatility and a growing gap between different commodities. Ultimately, CY2026 will be a year where success depends on strategic sourcing and domestic policy rather than traditional economic cycles, favouring producers well-positioned in the increasingly electrified global economy.
Hindustan Zinc: Positioning for the Future
As global supply chain changes and demand patterns evolve, driven by the transition to a low-carbon economy, we have aligned our strategy to capture emerging opportunities while mitigating risks. Anchored in transition-critical metals, we are scaling our capacity and diversifying into new minerals to build a larger, more resilient portfolio that is ready for the opportunities of tomorrow. We are also undertaking a disciplined approach to risk management, including strengthening cost leadership and strategically hedging some expected FY2027 volumes, to protect the balance sheet from pricing shocks. These efforts position us competitively to navigate a dynamic environment and drive sustained value creation.