Page 4 - The Indian EYE 080522

BIG STORY AUGUST 05, 2022 | The Indian Eye 4

ECONOMIC GROWTH

Fears of a slow down

As the US already goes into a technical recession and global trade growth likely to slow down As the US already goes into a technical recession and global trade growth likely to slow down
because of a decline in global demand and supply chain problems, the Indian economy will face a because of a decline in global demand and supply chain problems, the Indian economy will face a
big challenge. Can India cope with this crisis? big challenge. Can India cope with this crisis?

OUR BUREAU
New York/New Delhi/Mumbai

n a clear sign of worry, Industry
body FICCI on Thursday said
IIndia’s economy is estimated to
grow 7% in the current fiscal, lower
than the earlier projection of 7.4%,
mainly due to the ongoing geopoliti-
cal uncertainties. FICCI’s Economic
Outlook Survey (July 2022) also said
the policy rate of the Reserve Bank of
India is expected to touch 5.65% by
the end of this fiscal.
Currently, the policy rate (repo)
is 4.9%. The present round of survey
was conducted in June that covered
leading economists representing in-
dustry, banking and financial services
sector. The survey has projected an
annual median GDP growth for 2022-
23 at 7%, with a minimum and max-
imum growth estimate of 6.5% and
7.3%, respectively.
“Growth forecast has been down- Because of global trends the Indian economy will be facing a major stress test
graded from the 7.4% estimate in
previous survey round (April 2022) in the survey opined that the global sion of Ukraine. This has not been cies, has depreciated against the US
owing to geopolitical uncertainty and economy’s prognosis in 2023 will be enough, however, to cushion the en- dollar, which has been strengthened
its repercussions for the Indian econ- determined by the inflation trajecto- ergy shock. In June, India reported a by interest rate rises and a flight to
omy,” FICCI said. ry, the extent of interest rate hikes re- record $26.2bn trade deficit, the big- safety among investors. This month,
The median growth forecast for quired to maintain price stability, and gest among leading Asian economies, the rupee has weakened to a record
agriculture and allied activities has the impact of higher rates on house- largely because of crude oil imports. low of more than 80 against the dollar
been pegged at 3% for 2022-23 while hold consumption and investment Last year, even before Russia’s during intraday trading.
industry and services sectors are an- demand. invasion of Ukraine sent prices soar- India’s growth is also starting
ticipated to grow 6.2% and 7.8%, India’s post-pandemic recovery ing, fuel already accounted for 30 per to slow after bouncing back from
respectively. “Indian economy is not is facing growing risks, most nota- cent of India’s imports by value — Covid-19 in 2021. The Asian Devel-
immune to global volatility, as is evi- bly from rising prices stoked largely more than double the average of 14.7 opment Bank has cut India’s project-
dent from the deepening inflationary by India’s reliance on imported oil. per cent for other leading Asian econ- ed gross domestic product growth this
pressures and increasing uncertainty Any slowdown in India — a consum- omies, according to the World Bank. year by 0.3 percentage points, citing
in financial markets. The participants er market and manufacturing hub of Inflation in the country, which hit “high inflation and associated mone-
pointed out that these factors are ex- growing global importance — would 7.01 per cent in June, is second only tary tightening”.
erting pressure on India’s economic be one more piece of bad news for to Thailand among larger Asian econ- Actually, India’s economic activ-
prospects and is likely to delay the re- the world economy as the US veers omies. ity showed early signs of cooling off
covery,” it said. towards recession and momentum in Surging imports and higher in- in June as acute price pressures, ris-
As per the survey, major risks to China slows sharply, warned analysts. flation are causing India’s current ac- ing interest rates, and a falling rupee
India’s economic recovery include In a country that has tradition- count to fall further into the red. The dampened sentiment after a strong
rising commodity prices, supply-side ally maintained close ties with Mos- deficit is now projected to be one of showing the previous month.
disruptions, bleak global growth pros- cow, Narendra Modi’s government the largest among significant Asian Pent-up consumption had pow-
pects with the conflict prolonging in has been buying Russian oil at a economies this year, second only to ered revival in Asia’s third-largest
Europe. discount despite US and European the Philippines. The rupee, as with economy, but rising prices, due in part
Economists who participated sanctions over Vladimir Putin’s inva- many other emerging market curren- Continued at next page... >>

www.TheIndianEYE.com