Outlook for Global Economy & Indian Economy

After two years of pandemic suffering and thereafter war between Russia and Ukraine has impacted global economy and affecting everyone in a larger scale. As Supply chain bottlenecks are arising continuously due to this war which is ultimately putting pressure on global economy severely. Russian invasion on Ukraine created disrupting in global energy market and escalating further up the fuel crisis and energy crisis all over the globe.

The impact of pandemic and war between Russia and Ukraine is having mainly following impact on global basis:

-          Downward trend in GDP including advanced economy, emerging market and developing countries.

-          Increasing Inflation with lower demand, increasing interest rates.

-          Supply chain highly disrupted leading to hike in commodity prices mainly supplied from Russia and Ukraine.

-          Increase in energy prices.

-          Increasing food insecurity due to which prices for food commodity is escalating.

-          Uncertainty in government policies

-          Increase in unemployment due to closure of several manufacturing and small scale units.

All these factors are leading global economy downwards and it is being projected that in near coming years there would be pressure on economy all over the world.

Several reasons impacted Global trade largely due to pandemic impact, lockdown in major cities all over the world mainly China, logistic problem in Asian ports. Further Russia and Ukraine war has escalated these bottlenecks includes disruption of transportation through Black Sea which cause extra transportation cost for movement of cargo.

Inflation rate is increasing advanced and developing countries as there is persistent supply disruptions and labor issues in some countries will be putting pressure on consumer food price inflation.

India is having more challenges in these perspective. Lockdowns in several cities/ states due to pandemic very adversely impacted economy. It had direct impact on Manufacturing Units and service sectors which led to increase in unemployment level. After, relaxation in lock downs and opening of manufacturing units somewhat smoothen unemployment problem to a certain extent. India is facing several problems like multiple lockdowns imposed during COVID, supply chain disruptions, rising inflation rates, border issues with neighboring countries.

The Government of India is taking steps to come over these problems –

• The Government has extended food scheme for poor households who have suffered severely due to COVID.

• Fuel prices has been cut down by reducing taxes on it which will have impact on common people and will impact on transportation cost of goods to some extents.

• Import duties on several goods has been reduced to lower the domestic prices which is shooting up continuously.

• There is more impetus on logistic sectors which is being modernized and integrated to get optimum output and effectiveness.

• The government has increased spending on infrastructures which will create more job and business opportunities. Infrastructure is a main sector that gives acceleration to the economy. Several projects like, Roads, Power, Bridges, Dams, Urban and Rural infrastructures programs is being done by the government.

• Several labor laws and regulations have been simplified to attract investment in several sectors.

• RBI is increasing interest rates to curb inflation and control rising prices of commodities.

• India’s energy dependency is largely on Coal. The demand of energy is continuously increasing and it will keep on increasing with economic development and consumptions. Government is now focusing majorly on renewable energy and encouraging this sector to shift its load from coal.

As this global slowdown is caused by several factors and almost every country is facing its impact, and all the corrective steps must be taken by the Governments. They must put focus on demand driven economy which will lead recovery in a faster way.