Agency
Washington: Finance Minister Nirmala Sitharaman on Friday warned that the tense and uncertain geopolitical environment could trigger fresh supply concerns in the winter for critical commodities such as crude and natural gas, but exuded optimism over India’s economic outlook on the back of robust macroeconomic fundamentals and structural reforms undertaken by the government.
The Russia-Ukraine war has had a far-reaching impact on the global energy system, disrupting supply and demand patterns and fracturing long-standing trading relationships.
It has pushed up energy prices for many consumers and businesses around the world, hurting households, industries and entire economies of several nations.
Addressing the Development Committee meeting of the IMF and the Word Bank, Sitharaman encouraged the World Bank Group to explore innovative ways to mobilise resources to unleash its capacity as a Knowledge and Solutions Bank, and leverage its global convening power to assist all client countries to the maximum in pursuit of its twin goals.
The geopolitical environment remains tense and uncertain. This could trigger fresh supply concerns in the winter for critical commodities such as crude oil and natural gas. Inflation control would be a major concern in the developed economies, she said.
A reality check on the part of stock markets in the developed world could bring back growth chills everywhere. However, the outlook for the Indian economy’s growth remains optimistic on the back of strong macroeconomic fundamentals and structural reforms and initiatives undertaken by the government, Sitharaman said.
The latest annual meeting of the IMF and the World Bank, she said, offers a timely opportunity to put our heads together and think about how to navigate the headwinds caused by the ongoing multiple crises, including the lingering effects of the pandemic.
Indeed, our deliberations can usher a silver lining for the global economy amidst mounting inflationary pressures, currency depreciations, rising debts and shrinking fiscal space, she noted.
Sitharaman said the endangering of food and energy security coupled with tightening financial situation and increasing interest rates pose massive challenges to its efforts to bring back long-term growth and to reverse the development setbacks caused by the pandemic.
Our foremost collective priority must be to adopt a people-centric approach driven by innovation, to nurture new growth drivers and to bring the 2030 Agenda for Sustainable Development back on track, the finance minister said.
Sitharaman said that despite the global headwinds, the IMF forecasts that India remains the only large economy with a growth projection of above six per cent for both 2022 and 2023.
The available economic indicators for the period April to July 2022 corroborate the forecast. Index of Industrial production and 8 core industries points towards strengthening of industrial activity, she said.
The Purchasing Managers Index (PMI), which is a measure of the prevailing direction of economic trends in manufacturing, has touched an 8-month high in July and continues to remain in expansion zone for September 2022 with marked gains in growth of new business and output, the minister asserted.
Nonetheless, the momentum may be challenged if merchandise exports, which have fallen to a nine-month low in September 2022, do not recover to their earlier high levels, as slowing growth in advanced economies is set to weaken cross-border trade, she added.