India’s recession backup revealed – RT Business News

Being ‘decoupled’ from global markets will help the country dodge an economic downturn, S&P says

India is unlikely to join other major economies in plunging into recession, ratings agency S&P said on Tuesday, citing the country’s relative independence from global markets.

“[The] The Indian economy is decoupled from the global economy…even if you [India] are a net importer of energy. But you have enough foreign exchange reserves on the one hand and your companies have managed to maintain healthy balance sheets”, Paul Gruenwald, chief global economist and managing director of S&P, told reporters in Mumbai. Much depends on the behavior of global fund flows in the event of a recession in the United States and Europe, he added.

Last week, the World Bank warned that interest rate hikes by central banks around the world could trigger a “devastating” global recession next year. The global economy is experiencing its biggest slowdown since 1970, the institution added.

Central banks in the US, UK and EU have embarked on a series of aggressive rate hikes in recent months in a bid to curb the inflation spiral. The consumer price index has hit 40-year highs in the United States and Britain in recent months, in part due to the economic fallout from the conflict in Ukraine and sanctions against Russia.

Inflation in India stood at 7% year-on-year in August, which is below rates in the UK, US and Eurozone. Even though India’s central bank has raised its benchmark interest rate three times this year, the country will still do much better than the rest of the world, Gruenwald said. According to Indian ratings agency Crisil Ratings, the economy is expected to grow by 7.3% this fiscal year and at a somewhat slower pace of 6.5% next year.

India has not signed on to Western sanctions against Russia, citing domestic energy security concerns. Instead, the world’s third-largest energy consumer has stepped up its purchases of discounted Russian oil since the spring.

Trade between Moscow and New Delhi has more than doubled so far this year. The two nations are currently working on bilateral measures to bypass the US dollar in trade and expand the use of national currencies instead.

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