Eco has strength to withstand tariff headwinds: RBI report

New Delhi: India's economy has the strength to withstand headwinds triggered by the global tariff war due to a strong macroeconomic framework, moderating inflation, and robust domestic engines of growth, an RBI report said on Tuesday. "Escalation of trade and tariff tensions and the resultant financial market volatility have raised concerns regarding the weakening of global growth in the near term," said an article on the state of the economy in the April issue of the RBI bulletin.

"Although the dampening global economic outlook could impact India's economic growth through weaker external demand, the domestic growth engines are relatively less susceptible to external headwinds," said the report.

It said that prospects for the farm sector were boosted by the forecast of an above-normal monsoon for 2025, which could augment farm incomes and keep food prices in check.

"India is poised to benefit from supply chain realignments, diversified FDI sources, and engagement with global investors seeking resilience and scale, given its already established trade linkages," said the report. It said that India's consistent strength in services exports and remittance inflows continue to provide a vital buffer for the current account.

"Calibrated policy support can help India turn global volatility into an opportunity and strengthen its position in the emerging world economic landscape," said the report. It said that in the near term, the global growth outlook remains downcast, as uncertainty surrounding tariffs and the individual policy responses of different countries could result in lower investment spending, subdued consumer confidence, and a slowdown in global trade.

It added that a decline in global commodity prices could ease price pressures in commodity importing countries, although currency pressures could partly offset such benefits.


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