A latest report by an international business firm has flagged concern on the “impending” slump in economy, underscoring that there is “now 98 per cent chance of global recession.
According to Ned Davis Research data released late on Monday highlighted that the central banks around the world are likely to increase rates, at least in the short term, to combat inflation – the Reserve Bank of India’s Monetary Policy Committee meets later this week, and consensus estimates point to a 0.5 percentage point (560 basis point) increase – those fears are real, according to a Hindustan Times report.
“Most institutional and private forecasters believe that the forthcoming winter will usher in a long economic winter of slow growth if not outright contraction,” reported HT after analyzing a slew of reports. For example, it pointed out, the Organisation for Economic Cooperation and Development (OECD), which released its Interim Economic Outlook Report on September 26, expects global GDP to grow at just 2.2% in 2023, 60 basis points – one basis point is one hundredth of a percentage point – lower than what it projected in June.
According to the report, the situation is much worse for advanced economies. The Euro area is expected to grow at 0.3% (June forecast 2%) and the US is expected to grow at 0.5% (June forecast 1.2%). How will this affect the prospects of the Indian economy?
Pranab Sen, India’s former chief statistician, economic policy should guard against any kind of adventure until the global economy has settled, as reported in the HT. he said that \there is going to be a deceleration in the growth rate of the economy as the export engine will slow because of the global slowdown and domestic demand, both from the consumption and investment side, is yet to gather momentum. Given the fact that the fiscal deficit is already at a very high level, it can only be expected to come down, he added.
According to the paper, Sen’s views were echoed by private-sector economists as well. “RBI has already intervened aggressively to keep the INR from weakening. And indeed, while the USD has strengthened 18% since the start of the year, the INR has weakened only 9%. Some gradual depreciation could help nurture exports at a time when global demand is weak,” Pranjul Bahandari and Aayushi Chaudhary at HSBC Research said in a research note dated September 26.
-INDIA NEWS STREAM