RBI Red Flags Global Slowdown & Geopolitical Strife For India’s Economy

New Delhi, Dec 29 (KNN) The Reserve Bank of India (RBI) said on Thursday that various factors such as slowdown in world trade, tighter monetary conditions, increasing fragmentation and geopolitical pose risks to the Indian economy.

In its biannual ‘Financial Stability Report’, the RBI noted that the impact of El Niño conditions could present a challenge to agricultural output and food prices.

Meanwhile, Union Commerce and Industries Minister Piyush Goyal said the Red Sea crisis has hit India’s exports of rice, while the impact on other sectors would be known once the monthly trade data is made available.

Geopolitical strife in the Middle East have escalated to tensions in the Red Sea region. Indian shipments to the Middle East, US and Europe have been affected.

“Red Sea disruption is a matter of fact,” Goyal told reporters at an event. “One industry that we know that has been affected is rice. But we will know all the details once we have the data for the current month,” he added.

Global headwinds pose the main risks to the outlook for the Indian economy, although macroeconomic stability is anchored by moderating inflation, ongoing fiscal consolidation and a modest current account deficit (CAD), the RBI said.

It also noted that the Indian banks are well capitalised and capable of absorbing macroeconomic shocks, that net non-performing assets (NPA) ratio of banks declined to a multi-year low of 0.8 per cent at the end of September 2023.

(KNN Bureau)