Mumbai: Notwithstanding the geopolitical crisis created by the ongoing Russia-Ukraine conflict, India is making steady progress as it recovers from the third wave of pandemic though downside risks remain, the Reserve Bank said in an article on Thursday.
Observing that India’s macroeconomic fundamentals remain strong, the article in the RBI Bulletin on ‘State of the Economy’ said, “unfolding global developments nevertheless pose downside risks in terms of spillovers.”
It further said that the ongoing geopolitical crisis has heightened the uncertainty clouding the global macroeconomic and financial landscape even as the world economy struggles to recover from the pandemic.
Spiralling oil and gas prices and unsettled financial market conditions pose fresh headwinds to the still incomplete global recovery, it said, adding “amidst these testing times, India is making steady progress on the domestic front as it recovers from the third wave.”
The Reserve Bank said the views expressed in the article are those of the authors and do not necessarily represent the views of the Central Bank.
The article authored by RBI officials noted that the global economy is facing formidable headwinds from the conflict in Ukraine. Oil prices had touched multi-year highs, financial markets are on edge, driven by mass buying into safe-haven assets, particularly gold.
“Amidst such turbulence, the global growth outlook is worsening with intensified inflation and financial instability risks,” it said.
“In the absence of an early solution to the ongoing conflict, the crisis can have adverse implications for the global recovery, necessitating downward revisions of global growth for 2022 and beyond,” the article said.