LOOMING EXTERNAL MACROECONOMIC UNCERTAINTIES & ITS IMPLICATIONS FOR INDIA - Sarthak Desai
After looking at the latest GDP growth figures (4.1% for Q4 FY22 and 8.7% for FY22) revealed by the NSO last week, one may wonder whether the Indian economy is out of woods or not? The answer is Yes. However, India still hasn’t been able to cross its pre-pandemic growth trajectory (without any Covid). Many external shocks seem to shadow the growth targets the Indian government had set in when the budget was announced on Feb 22. The shocks that the Indian economy faces are inflation, capital outflows, depreciated currency, slowing European economy, and sudden oil price hikes. All of these have both direct and indirect relationships with the Russia-Ukraine war. Due to sanctions imposed on Russia, many western countries are reluctant to buy oil from Russia. It has put demand-side pressure on oil prices. As Russia is a major oil supplier in the global market, higher oil production by OPEC countries won’t help. Thus, oil prices are expected to remain in this range for the next many mo...