Global economic developments may complicate outlook for Indian economy

Global economic developments are expected to complicate the outlook further for the Indian economy next year and there is a need to maintain vigilance on the external front, a Finance Ministry report said on Friday.

According to the ministry’s Monthly Economic Review for November, the external sector continues to face the headwinds emanating from the global slowdown.

However, it said, the downside to a widening current account deficit is expected to be limited by a robust services export performance through the rest of the year and by inward remittances, which are expected to touch $100 billion this fiscal, as per the World Bank.

Global economic developments are expected to complicate the outlook further for the Indian economy next year and there is a need to maintain vigilance on the external front, a Finance Ministry report said on Friday.

According to the ministry’s Monthly Economic Review for November, the external sector continues to face the headwinds emanating from the global slowdown.

However, it said, the downside to a widening current account deficit is expected to be limited by a robust services export performance through the rest of the year and by inward remittances, which are expected to touch $100 billion this fiscal, as per the World Bank.

The good news is that much hard work has been done in the last several years and a strong platform has been erected on which the superstructure of a middle-income economy can be constructed, it said.

On inflation, the report said pressures have been easing, with retail and wholesale inflation falling to 11- and 21-month lows, respectively, in November.

WPI inflation rate continues to decline, and CPI inflation rate came in below the RBI’s upper tolerance limit of 6 per cent, primarily driven by the decline in food inflation.

Core inflation, however, continues to remain sticky and persisted at an elevated level of 6 per cent in November 2022, partially reflecting increased pass-through of high manufacturing costs to consumer prices as demand continues to recover swiftly, it said.

The good news is that much hard work has been done in the last several years and a strong platform has been erected on which the superstructure of a middle-income economy can be constructed, it said.

On inflation, the report said pressures have been easing, with retail and wholesale inflation falling to 11- and 21-month lows, respectively, in November.

WPI inflation rate continues to decline, and CPI inflation rate came in below the RBI’s upper tolerance limit of 6 per cent, primarily driven by the decline in food inflation.

Core inflation, however, continues to remain sticky and persisted at an elevated level of 6 per cent in November 2022, partially reflecting increased pass-through of high manufacturing costs to consumer prices as demand continues to recover swiftly, it said. PTI