Special Session on ‘Current Macroeconomic Situation and Business Outlook’
Merchants’ Chamber of Commerce & Industry hosted a Special Session on Current Macroeconomic Situation and Business Outlook with Mr. Luis Breuer, Senior Resident Representative India, International Monetary Fund today at 12:30 p.m. at the Chamber.
The discussion was centered around the global economic scenario impact of the pandemic and then that of the Russia-Ukraine Conflict.
Russia- Ukraine conflict has triggered a costly humanitarian crisis over the last three months. Hence, the economic damage from the conflict is contributing to a significant slowdown in global growth in 2022 and adding to inflation. Prices of crude oil and gas, food grains such as wheat and corn, and several other commodities have shot up, hitting vulnerable populations in low-income countries in the hardest way.
Mr. Namit Bajoria, Vice-President, MCCI in his Welcome Address said that the last two years are a saga of our determined fight against the daunting challenges posed by the pandemic and India has come out of it more resilient. India now stands at a crucial juncture once again. Mr. Bajoria again added, “Indian economy is facing high inflation, widening trade deficit and foreign portfolio investment outflow.”
Mr. Luis Breuer, Senior Resident Representative India, International Monetary Fund in his address said that the Ukraine war is an economic earthquake. The Conflict between Ukraine and Russia has escalated the disruptions to the commodity markets (crude oil, food grains, etc,) supply chains, and the refugee crisis. India has witnessed 7.8 percent of inflation due to this geopolitical unrest.
According to the IMF growth projection report, India’s growth rate has been projected to be 6.9 percent in 2023. In India, the private sector has maintained stabilized debt at a high level, and the balance sheet of the private entities in the banks has been strengthened over the last 5 years. Mr. Breuer also assured us that the economic crisis of the neighboring countries of India will not affect the Indian economy much.
Mr. Breuer said that the change in the interest rate of China would affect Asia in the same way as the combined effect of changing the interest rate of the USA and Europe. However, a rise in US real rates can have a significant spillover effect on Asia.
While speaking about the global economy, Mr. Breuer said that economy isn’t fully recovered; there exists an output gap which may lead to a combined effect of higher inflation and lower employment.
Over the last 15 years, the World economy has witnessed 3 major crisis such as Global Financial Crisis, the COVID pandemic, and the Russia-Ukraine Conflict. It is expected that the economy will bounce back.
In the response to the question during the interaction about the future of China’s Economy, Mr. Breuer replied that China has a very high presence in the global economy. It shifted its economy to be less dependent on export and concentrated on increasing purchasing power domestic market.
The Session concluded with a hearty Vote of Thanks proposed by Shri Smarajit Mitra, Chairman, Council on Skill Development and Startups, MCCI
Source: MCCI-Release
