Finance minister Arun Jaitley addresses the fourth annual Growth Net Summit in New Delhi on Thursday. (Photo: PTI)
Finance minister Arun Jaitley addresses the fourth annual Growth Net Summit in New Delhi on Thursday. (Photo: PTI)
There are fresh clouds of worry on the global economy horizon even as India’s growth is expected to maintain momentum amid deteriorating external environment.
World Trade Organi-sation (WTO) on Thursday revised 2016 global trade forecast downward by more than one percentage point, warning that a slowdown in China and broad market volatility continued to threaten growth. WTO forecast that world trade growth will come to 2.8 per cent this year, lower than a previous forecast of 3.9 per cent.
There were also reports that US Federal Reserve may not raise interest rates before June as many participants during a recent Fed meeting were worried that global economic and financial developments are continuing to pose risks.
However, India seems to be on a better footing to deal with external vulnerabilities. Rating agency Moody’s Investors Service said that low commodity prices and better FDI inflows have reduced India’s vulnerability to external shocks. In a report it said that India’s external financing needs have diminished significantly over the last three years.
International Finance Corp. (IFC), part of the World Bank Group, also described India as the “bright spot” among major emerging econom-ies and said that international investors have a strong appetite for country’s assets as is evident from the good response to the ‘Masala Bonds’.
IFC has been issuing offshore rupee bonds better known as ‘Masala Bonds’. In March, it issued such securities worth $30 million having 15-year tenure — the longest-dated offshore rupee bond.
“India is a unique story because all the other major emerging markets are facing challenges. Brazil, South Africa and Russia are facing their own problems. So when you look at BRICS countries, India is the bright spot,” said IFC vice-president Jingdong Hua.
Finance minister Arun Jaitley on Thursday also expressed confidence that rupee does not face any “serious challenge” of depreciation and will find its own level after initial bouts of volatility.
Mr Jaitley said that rupee is impacted by global events but eventually recovers. “Of course if some significant movements in currencies globally take place — like US rates, there is some movement. But I think eventually after an initial impact rupee has shown, at least twice in last 3 years, a tendency to recover.”
