At a time when both the IMF and World Bank have already warned of a global recession knocking on the door, the Governor of India¡¯s central bank, i.e. the Reserve Bank of India has put forth an optimistic view for the country by stating that 'the risk of recession is lower for India.'
This comes amid inflation concerns and four back-to-back repo rate hikes by RBI.
RBI governor Shaktikanta Das said that a synchronised tightening of monetary policy globally has progressively increased the risk of a hard landing, which is a recession to tame inflation. India, however, is differently placed.
The governor was speaking about the rising inflation across the world and said that inflation in systemically important advanced economies turned out to be persistent rather than transitory, as per ANI.
During the annual research conference of the Department of Economic and Policy Research (DEPR) of RBI in Hyderabad over the weekend, governor Das said, "Spillovers to EMEs (emerging market economies), and to India, were in the form of capital outflows, depreciation pressures on currencies, reserve losses and imported inflation."
The age-old research issues for emerging market economies like external sector sustainability assessment, feasible range of policy options to preserve sustainability, and analysis of their effectiveness have once again come to the forefront, more so because the nature and size of the spillover risk are very different now, according to the RBI Governor.
A few months ago, a survey of economists by Bloomberg mentioned that India had zero probability of slipping into recession next year.
Crisis-hit Sri Lanka has 85% probability of falling into recession in the next year. Economists had also raised their expectations for a chance of a recession in countries like New Zealand, Taiwan, Australia and the Philippines to 33%, 20%, 20% and 8%, respectively.?
Bloomberg Economics¡¯ model had put the chance of a US recession at 38% within the next 12 months and indicated a 20% chance that China will enter recession and a 25% likelihood for South Korea and Japan.
Also, FMCG giant Hindustan Unilever's CEO?Sanjiv Mehta?too had mentioned that?India is unlikely to face a recession and the country remains a?bright spot.
However, unlike the Bloomberg economists' survey and HUL CEO's thoughts,?66% of CEOs in?India?believe there will be a?recession?in the next 12 months,?according to KPMG 2022 India CEO Outlook.
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