Even as the global economy faced significant uncertainty in 2022 due to the Russia-Ukraine war, the jump in crude oil, and the COVID-19 impact, the Indian economy has shown resilience. The year 2022 witnessed a rebound in the country’s GDP growth as well as a softening of inflation in the December 2022 quarter.
“Despite the geopolitical uncertainty and fear of a global growth slowdown, the Indian economy has shown resilience. In fact, the 2QFY23 GDP growth print remained next only to Saudi Arabia (8.6 per cent yoy) among the major economies… Notwithstanding this, there are pressure points and the Indian economy still has a lot of ground to cover which was lost due to COVID-19,” India Ratings has said in a report.
Economic Growth In India During 2022
The Indian economy grew 13.5 per cent in the June 2022 quarter (Q1FY23), which was the fastest growth in a year, as the country’s GDP had grown at 4.1 per cent in the previous quarter (Q4FY22), 5.4 per cent in the December 2021 quarter of FY22, and 8.4 per cent in September 2021 quarter. In June 2022 quarter, the world’s major economies US and the UK witnesses contractions. In the September 2022 quarter also, India’s GDP grew 6.3 per cent.
Earlier this month, while presenting the RBI’s bi-monthly monetary policy statement, RBI Governor Shaktikanta Das said, “In…hostile international environment, the Indian economy remains resilient, drawing strength from its macroeconomic fundamentals. Our financial system remains robust and stable. Banks and corporates are healthier than before the crisis. Bank credit is growing in double digits for eight months now. India is widely seen as a bright spot in an otherwise gloomy world.”
Inflation In India During 2022
In the early months of this year 2022, inflation saw a spike in its pace due to supply contraints caused by the Russia-Ukraine war, hitting as high as 7.79 per cent in April, which was an eight-year high level. The retail inflation had stood at 7.04 per cent in May, 7.01 per cent in June, 6.71 per cent in July, and 7 per cent in August. In September, the inflation had accelerated to a five-month high of 7.41 per cent.
However, in October, the retail inflation had eased to a three-month low of 6.77 per cent. Now, in November also, the inflation saw a decline and eased to eased to an 11-month low of 5.88 per cent with food prices seeing sharp cooling.
India Ratings, however, has said while the headline inflation is under the RBI’s target, sticky core inflation needs continuous monitoring.
Global Uncertainties In 2022
The global economy is still marred by profound shocks and unprecedented uncertainty. At the beginning of 2022, just as the COVID-19 pandemic was receding, the war in Ukraine overwhelmed the world in a black swan moment and fundamentally altered the global economic outlook.
Major economies all over the world, including UK, US, Italy and France, struggled with sky-rocketing inflation. The US and the UK also saw contractions in their GDP growth for two consecutive quarters, thus fulfilling the textbook condition for a recession.
Crude oil prices in the world reached as high as about $140 per barrel in February after the Russia-Ukraine war started. The prices had hit $100 per barrel for the first time since 2014..
Mixed signals are emanating from the geopolitical situation and financial market volatility. Surges in food and energy prices and shortages in key staples have severely affected the poorer sections across the world. Though international food, energy and other commodity prices have eased moderately in recent times, inflation remains high and broad-based.
While no country is spared the ill-effects of such large shocks, emerging market economies (EMEs), especially the ones dependent on food, energy and commodity imports, have been the worst affected.
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