Global Tensions and the Indian Economy: A Resilient Rupee Amidst Geopolitical Shifts
S&P Global Ratings indicates that despite ongoing geopolitical tensions, India's rupee and inflation remain stable due to lower global energy prices. Economist Vishrut Rana notes energy prices, though rising, are still lower than the previous year. The rupee faced moderate pressure, while inflation is expected to ease by 2025.
- Country:
- India
The impact of global geopolitical tensions on the Indian economy, especially the stability of the rupee and inflation rates, appears limited, according to S&P Global Ratings. A key finding highlights the mitigating effect of relatively lower global energy prices, which counteracts the pressures exerted by ongoing conflicts.
S&P Global Ratings economist Vishrut Rana emphasized that despite potential inflationary risks, energy prices remain lower than last year. This factor plays a crucial role in softening the blow to current account outflows and domestic energy price pressures. He also noted that food prices could more significantly influence inflationary trends, contrasting with energy cost impacts.
The forecast for the rupee suggests a gradual weakening against the dollar, with S&P predicting it could decline to 87.5 per dollar by 2025. Despite this, the Ratings agency has raised India's GDP growth projection to 6.5%, factoring in a normal monsoon, reduced crude oil prices, and monetary policy adjustments.
(With inputs from agencies.)
Google News