Indian economy not immune to global challenges, but resilient, cenbank report says

Flux in the global economy presents considerable challenges to the global macroeconomic outlook and the Indian economy is not immune, the central bank said in its monthly bulletin.

But the domestic economy has so far exhibited resilience, it said, adding that low inflation, strong corporate and banking balance sheets are contributing to this.

The Reserve Bank of India (RBI) earlier this month raised its forecast for growth in the Indian economy to 6.8% for the current year.

"The growth outlook remains resilient, supported by domestic drivers, despite uncertainties on the external front,” it said.

"Domestic structural reforms are helping to somewhat offset the drag on growth from the weakening external demand conditions.”

The report reiterated the Monetary Policy Committee’s view that current macroeconomic conditions have opened up policy space for further supporting growth.

India faces punitive tariffs on exports to the US, with President Donald Trump reiterating that these will stay in place unless New Delhi pares purchases of Russian oil.

High US tariffs on India’s exports do not pose a major concern for the overall growth, the central bank’s monthly report said.

It said that merchandise trade remains resilient but pointed to a sharp decline in exports to the US in September as the higher tariffs kicked in.

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