Recent geopolitical developments hurting domestic equity indices and causing volatility in crude oil prices and exchange rates: KPMG



Given India’s import dependency on crude oil, natural gas and other commodities, rising inflation and the current account deficit are aspects to watch, especially given the evolving geopolitical situation, KPMG warned in the Global Economic Outlook H1′ 2022 released on Wednesday.

The economy is expected to continue on its positive growth trajectory, however, recent geopolitical developments hurt domestic equity indices and led to volatility in crude oil prices and exchange rates, KPMG said.

Preeti Sitaram, Director, Government & Public Services, KPMG in India, said the steady rise in high-frequency indicators (HFIs) and GDP growth numbers for the past two quarters pointed to an economic recovery in India. Also, the government’s stimulus to infrastructure development and domestic manufacturing was expected to boost growth, create more jobs and help build supply chain resilience.

“However, the turbulence in crude oil and commodity prices due to the current geopolitical uncertainties are leading to high input prices for industries and supply chain disruptions that could pose a threat to the country’s economic growth plans in the near term,” she warned.

In addition, uncertainty about the fourth wave and virus mutations posed a significant risk to future economic growth, Ms Sitaram added.

The ongoing conflict in Ukraine will hurt global growth prospects and increase inflationary pressures around the world, KPMG said.

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