The annual report of the Reserve Bank of India shows that the recovery of global economy is expected to demonstrate a loss of momentum in 2022.
According to the NDTV, RBI report has said, 'The risks are large and to the downside from the escalation in the Russia-Ukraine war leading to shortages of raw materials as global supply chains continue to remain distorted, even before they could recover from the pandemic-led distortion'.
The report also showed that the reemergence of the pandemic in the form of mutations, the lock-down of Chinese markets and climate change crisis surpassing the Paris agreement goals are also factors that are responsible for the worldwide economic worries.
Despite the woes of the global economy, Indian economy is comparatively better placed. They can therefore improve the recovery underway and bolster the macroeconomic prospects, the RBI has said.
In an off-cycle meeting conducted in May, the Indian Central bank has increased the key interest rates. But even then, the RBI said, monetary policy remains accommodative but focused on the withdrawal of accommodation. Priority has been assigned to containing inflation within the target while supporting growth.
The report added that India's economic recovery from the pandemic depths had been sustained in 2021-22, and the momentum is expected to continue in 2022-23 broadly, but with risks to the downside from the geopolitical shock and its spillovers.
Still, despite these risks, the recovery is getting entrenched and is broadening, said the RBI.
The report showed the problem that the central bank has been facing- regulate the pressures bought on by increasing prices without affecting economic growth.
The RBI also said that during a time where support for economic recovery must be given precedence, the persisting high inflation is demanding countervailing monetary policy action.