NEW DELHI: Global economic conditions and sentiments have soured after the Global economic conditions and sentiments have soured after the outbreak of the West Asia conflict, adversely impacting the growth-inflation outlook, Governor Sanjay Malhotra said in the latest RBI Bulletin on Thursday, of the West Asia conflict, adversely impacting the growth-inflation outlook, Governor Sanjay Malhotra said in the latest RBI Bulletin on Thursday, adding that Central Bank would remain vigilant of the evolving situation and put in place policies that prioritise the best interest of the economy.
The conflict in West Asia has intensified pressures on the global supply chains in March with some easing observed in the first half of April.
Before the outbreak of the conflict, India's macroeconomic fundamentals exuded confidence with buoyant growth and low inflation.
"Conditions turned adverse in March with the widening of the conflict zone and its intensification. The fundamentals of the Indian economy are on a stronger footing at the current juncture than in previous crisis episodes as well as relative to many other economies, providing it with greater resilience to withstand shocks," Malhotra said in the first RBI Bulletin of FY27.
Global growth faces increasing downside risks as the sharp rise in energy prices and shortages of inputs for various industries have stoked inflation fears and pushed up the geopolitical risk premium in oil markets.
"Heightened uncertainty precipitated by the ongoing conflict is weighing on the outlook. Safe-haven flows have exerted depreciation pressure on currencies of major economies as the US dollar has strengthened. While commodity prices, such as of metal and gold, have moderated, financial markets have become more volatile," the RBI Governor wrote.
Equities registered a broad-based correction. Sovereign bond yields, already elevated due to long-run fiscal sustainability concerns, driven by inflation fears, have hardened across major economies, he stated. (IANS)
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