During the Pandemic, as many economies slowed down, so did India's Economy. But the rising crude oil prices and supply disruptions following Russia’s invasion of Ukraine could further slow it down. This is because 80% of India's oil usage is dependent on imports. The trade deficit might increase, following the weakening of the Indian rupee and higher inflation because of the rise in prices, as one barrel shot up to $105. This may also adversely affect household spending and private investment. A 10 percent rise in crude oil prices could lower India’s GDP growth by 0.2 percentage points, this may also pose risks to corporate profits. This slower rate of economic growth and the little attention given to monetary and fiscal policy, as it is right now, could affect investment and job creation. Prime Minister Narendra Modi’s government last week flagged that the pandemic recovery will be challenged by geopolitical risks. The situation might continue till the Russia-Ukraine issue comes to a rest. Hopefully, things will get better.
https://www.aljazeera.com/economy/2022/2/28/an-already-slowed-indian-economy-faces-fresh-risks
The Indian Economy might continue to face a slower economic growth given the situation. The reserve bank of India is continuously trying to support the economic recovery by cutting the repo rate, the interest rate at which it lends money to commercial banks, by a total 115 basis points since March 2020. Hopefully, this and other measures taken by the country will help the economy. And that the Russia-Ukraine crisis will come to peace.
ReplyDeleteFollowing Russia's invasion of Ukraine I think we can expect economies around the world to slow. We can definitely expect India's economy to shift as they rely heavily on Russian imports. I think we can expect inflation and Russia's export to have a significant impact on India's consumption of oil.
ReplyDelete