It is expected that the global economy will slow down due to the slowdown in America, Europe and China. In 2023, there is a fear that the economy may reach recession in countries including America, Europe and China. Meanwhile, the head of the International Monetary Fund, Kristalina Georgieva, is expected to have an impact on the international economy. This is amid the crisis between Ukraine and Russia, and inflation continues to peak. This has prompted an increase in interest rates. It is expected to play an important role in the Central Bank’s operations.
Impact of Corona on Global Economy
In the meantime, as the impact of Corona is again taking shape in China, it may have further impact. It is expected to increase worldwide. Meanwhile, China’s economy is expected to see its worst contraction in 40 years. The impact of Corona is expected to peak in the coming months as well. It is feared that this may have an impact on the economy in the coming months as well. It is not only in China but it can affect the entire world.
Zero Covid Policy
China’s economy is already under pressure due to China’s Zero Covid Policy. Restrictions are coming from many places, although not as strict as they are now. This will definitely have an impact on the economy further.
Pressure on growth
It is expected to remain such volatility in China for the next few months. It can be said that this is a difficult time for China. In the midst of such a slowdown in China, it is expected that the global economy may be in decline. The annual growth rate is expected to be 4.4% in 2023. It is expected that there may be further pressure.
America’s position
The US economy continues to decline. This is expected to have an impact on further development. The US Federal Reserve has been raising interest rates to keep inflation under control. However, this rate is expected to continue to slow down in the coming months. However, it has also said that the central bank’s action will continue until inflation reaches the 2% target. Therefore, it is expected to further affect the US economy.
Europe
Interest rates in Europe are also starting to rise as inflation continues to peak. Inflation continues to be at a multi-year high, which is feared to have an impact on inflation. When major countries also see a recovery like this, it can have a big impact on India, which is dependent on it.
Impact on the Indian economy
It is feared that India will be affected, especially the major export sector including the IT sector. The International Monetary Fund has estimated that India’s economic growth rate will grow to 6.1% in the fiscal year 2024. It also predicts a growth of 6.8% in the current financial year. Crude oil prices are also at their peak amid the current international tension.
Gradual growth
India’s economic growth is expected to grow gradually in the next 2 years amid many factors such as higher crude oil prices, decline in demand, and critical financial situation. The impact of Corona is also increasing in order to have an impact on further development. Due to this, the economy is expected to be affected.
Economic Growth Vs Inflation
However, the worrying thing about this is that experts expect inflation to be higher than economic growth in the current financial year. While the Indian economy is expected to grow at 6.8% in the current financial year, experts have predicted inflation at 6.9% in the current year.
Inflation May Rise
Amid the Russia-Ukraine conflict, successive sanctions have been imposed on Russia. This is also expected to have an impact on the Indian economy. In particular, commodity prices may increase prices of crude oil, cooking oil, grains etc. may peak, and it is expected that this may further trigger inflation in India.
Major action of Government
This can reduce consumer confidence. However, India is expected to grow at 6% in the medium term and 7% in 2023. However, the Government of India is constantly taking steps to improve infrastructure facilities. This may encourage further capital investments. Meanwhile, private demand is also expected to pick up.
Interest rates may increase
With inflation already peaking in India, rising fuel and commodity prices may further fuel inflation. Inflation is already above the RBI’s target. The Reserve Bank, which has already taken a number of measures this year, may lead to further increases.
Credit growth will increase
India’s current account deficit widens to 3.5% by 2023. It was 1.7% last year. This has been fueled by rising inflation, increased demand and increased imports. Credit growth is also expected to pick up. This may lead to economic growth in the medium term. As overall India’s growth is improving compared to other neighboring countries, this may encourage increased investments in India. This may further favor the growth of India.
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