Current Economic Outlook

Indian Economy is the Bright Spot in current World Gloom.

The Indian Economy is the  bright spot in the current world gloom.  The Indian macro economic variables seems to be showing much more resilience than it was expected. The full year GDP projection has been kept at 6.5 % by RBI and the World Bank has also projected the growth rate at 6.3 %. This is during the time when the world GDP is struggling around 2.2%.

RBI move not to increase interest rates came as huge surprise for the markets and economy. This will surely help the economy to get more time to absorb the earlier rate hikes of 250 basis point. The repo rate which was at 4 % is now at 6.5%. In Indian economy the cost of capital is very important as it can really affect the domestic demand and consumption cycle which is in turn credit based. The CPI inflation last time eased a bit from 6.52% to 6.44% but it is still higher then the RBI comfort zone of 6 %. Going ahead if the inflation eases out then RBI will be more comfortable to set the downward interest rates cycle.

GST collection at Rs. 1.60 lakh crore. This is the twelfth consecutive month when the GST collection has been above Rs. 1,40,000 crore mark. GST indicates business thriving and Economy showing resilience against the slowdown in global economy.

Globally the Central banks have reached almost close to their terminal rates and may be going ahead in 2023 we may see the interest rates going downwards. This will really boost the global demand and consumption and the world economy may see better days in terms of economic prosperity. The key question at the global level is whether USA will be able to avoid the inflation or it will be into recession.