India’s economy remains resilient despite global geopolitical tensions and trade uncertainties, according to the Reserve Bank of India.
India’s economy is showing signs of resilience against the backdrop of global fluctuations, as the Reserve Bank of India (RBI) elaborated in its monthly bulletin released on Wednesday. The central bank highlighted India’s ability to withstand international challenges, such as geopolitical tensions and trade uncertainties.
Last month, the RBI made a significant move by reducing its key policy rate by an unexpected 50 basis points and lowering the cash reserve ratio for banks. These changes were possible due to low inflation, which offered the bank the flexibility to prioritize growth amid unpredictable global conditions. India’s economic activity has remained steady, the bulletin noted, supported by favorable prospects for summer-sown crops, robust momentum in the services sector, and moderate growth in industrial activity.
The report also pointed out that “high-frequency indicators suggest stability in aggregate demand,” signaling a positive outlook for India’s economic prospects. Retail inflation in the country dropped to 2.10% in June, marking a six-year low and further contributing to positive economic sentiment.
Additional factors propelling economic stability included “de-escalating geopolitical tensions in the Middle East and optimism on trade deals,” as well as a relaxation in regulatory norms for infrastructure financing, which collectively improved financial market sentiment in the latter part of June.
Despite these optimistic indicators, the bulletin also highlighted that domestic investor sentiment was cautious in the first half of July. This caution was attributed to ongoing uncertainty over a potential trade agreement between India and the United States and mixed corporate earnings for the quarter ending in June.
The RBI’s insights into India’s economic resilience underscore the country’s ability to navigate complex international challenges while maintaining domestic stability and growth.