December 5, 2022

Rating agency S&P stated on Tuesday that due to its relative independence from international markets, India is unlikely to follow other developed economies in entering a recession.

“Even though India are a net energy importer, Indian economy is disconnected from the world economy. Paul Gruenwald, the managing director and global chief economist for S&P, spoke to reporters in Mumbai and said, “On the one hand, you have enough foreign exchange reserves, and on the other, your enterprises have maintained sound balance sheets. If there is a recession in the US and Europe, a lot would rely on how global fund flows act, he continued.

The World Bank issued a warning earlier this week that global interest rate increases by central banks might lead to a “devastating” global recession in the future. According to the agency, the world economy is experiencing its most severe recession since 1970.

The services sector’s rapid rebound is driving India’s economy above its pre-pandemic level, and it is being bolstered by the lagging effects of easy financial conditions, a push for public capital expenditures, and an increase in real bank credit growth. The improvement had spread widely throughout investment, industry, consumption, and the external sector.

Compared to the UK, US, and Eurozone, India’s inflation rate in August was lower at 7% year over year. India will still be performing far better than the rest of the globe, according to Gruenwald, despite the central bank’s three increases to its benchmark interest rate this year. According to the Indian rating company Crisil Ratings, the economy will expand at a 7.3% annual rate this fiscal year and at a little slower 6.5% annual rate the next year.

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In response to concerns over domestic energy security, India has not joined Western sanctions against Russia. Over the past few months, the world’s third biggest energy consumer has increased its purchases of discounted Russian oil.