The global economy is expected to fall into recession: RBI
MUMBAI: The Reserve Bank of India The monetary policy report released Thursday shows that while inflation is expected to be lower than expected, the pandemic has dramatically altered the growth outlook, which it has not attempted to forecast. However, the central bank takes into account the rupee at an exchange rate of 75 per dollar and the average prices of crude oil at $ 35 for fiscal year 21.
The global economy is expected to fall into recession in 2020, as post-Covid-19 projections indicate. The sharp reduction in international crude oil prices, if maintained, could improve the country's terms, but this channel's profit is not expected to compensate for the drag from the closure and the loss of external demand, the RBI said in its report. .
“India has not been spared the exponential spread of Covid-19 and by April 7, more than 4,700 cases have been reported. Covid-19 would impact economic activity in India directly through the internal blockade. Second-round effects would operate through a severe slowdown in world trade and growth. More immediately, indirect effects are transmitted through financial and trust channels to national financial markets, ”the report said.
According to the RBI, under these conditions, the forecasts are dangerous, since they are subject to major revisions with each incoming data on the pandemic. Projected inflation for the first financial year beginning April 1 fell to 4.8% and is seen to drop to 4.4% in the quarter ended September from a range of 5-5.4% for the previous six-month forecast, according to the central bank. Monetary policy report.
Price gains are expected to slow further to 2.7% in the quarter ended December, near the low end of the RBI target band of 2-6%. Forecasters, in the survey conducted before the RBI monetary policy announcement on March 27, expected real GDP growth to rebound from 4.6% to 6.1% in the fourth quarter of 2013. However, after of the blockade and the exponential increase in cases worldwide, many have substantially reduced the forecasts.