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Economy · Energy · Geopolitics · India
India's monthly economic report warns of downside risks to its 7.0%-7.4% growth forecast for the next fiscal year, starting April 1, due to escalating energy costs and supply disruptions from the Middle East conflict, which began a month ago.
The conflict, initiated by the U.S. and Israel against Iran, has disrupted a key shipping route, impacting 20% of global oil supply and consequently increasing energy and freight costs, straining supply chains. This situation raises concerns over inflation and growth, as stated in the government review.
India's chief economic adviser, V Anantha Nageswaran, noted that high-frequency data for April and May will clarify growth prospects. The current account deficit, already at 1.3% of GDP in the Oct-Dec quarter, will significantly worsen next fiscal year.
The report emphasizes the need for immediate, targeted relief for vulnerable businesses and households. Domestic demand remains stable, but growth risks are rising, especially for sectors reliant on imported inputs.
The Indian rupee weakened to 95 against the U.S. dollar in March due to capital outflows and higher import costs.
