Going To Face Recession in 2024?
“Recession may appear in 2024 due to uncertainties related to higher food and energy prices and geopolitical tensions.” Indian Finance Ministry added.
Recession – Given that many nations are experiencing recessions, the economic challenges are more external. As a result, the minister warned that their demand may decline, which would reduce exports.
To thrive in the export sector, we must locate fresher markets. If businesses aren’t, she continued, there is a sizable domestic market that needs to be explored, particularly by micro, small, and medium-sized businesses.
Earlier this month, the Reserve Bank of India’s projection of 6.5 percent for gross domestic product growth was significantly exceeded by the International Monetary Fund’s (IMF) 20 basis point reduction to 5.9 percent for the financial year 2023–24.
Recession – The IMF estimates 6.8% growth, but the statistics ministry projects a 7% growth in the Indian economy in 2022–2023.
The IMF revised down its January forecasts by 10 basis points to predict that the global economy would grow by 2.8 percent in 2023 and 3 percent in 2024. The organization has issued a warning, stating that over the next five years, global growth may stay at roughly 3%.
One-hundredth of a percentage point is equal to one basis point.
The markets were taken aback when the Reserve Bank of India decided to keep the policy repo rate at 6.5 percent this month. The central bank has maintained that there has not been a change in policy, just a pause on rate increases. However, later this year, policy rate cuts are factored in by the markets.
After the pandemic struck in 2020, the central bank slashed policy rates to all-time lows and pumped a lot of liquidity into the banking system, while the government’s economic response was concentrated on credit support and measures aimed at the most vulnerable.
According to Sitharaman during the event, numerous developed economies printed and distributed money in the interim.
She continued, “This formula caused double-digit inflation in their economies, something that hadn’t happened in 30–40 years.”
In countries that printed money during the pandemic, interest rates were initially “low for long,” and inflation rates are currently “high for long.” Sitharaman stated that their economy is in a recessionary phase and is in a state of flux, with global implications, as per the minister’s office.
“India’s Finance Ministry has said a recession may appear in 2024 due to uncertainties related to higher food and energy prices and geopolitical tensions.”
The ministry also stated that inflation will remain a downside risk in the Monthly Economic Review for October, which should put the government and the RBI on high alert.
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