New Delhi:
Due to the Russia-Ukraine crisis, dark clouds of danger are hovering over the global market. Countries and central banks around the world have slowly come out of the outbreak of the Covid-19 pandemic. There has been a recovery in the economies and now the Ukraine conflict has again given great tension to everyone.
The effect of these geopolitical tensions will be seen on the global market. According to a report by the well-known financial and research company Nomura, due to the Ukraine crisis, the biggest impact in Asia can be seen in India.
Crude oil prices will rise
The effect of skyrocketing crude oil prices will affect the common man the most. The price of Brent crude has jumped about 3 percent to reach $105 per barrel. The continuous increase in the prices of crude oil and food items will have a bad effect on the economies of Asia. Rising inflation, weak current account, rising deficit and impact of economic growth will make the problem worse.
GDP growth will be affected
India, Thailand and the Philippines will suffer the most in this situation. Being a pure oil importer, India will also suffer a lot because of the continuous increase in oil prices.
Inflation will increase
According to QuantEco Research, a $10 per liter increase in India’s crude basket could reduce the annual GDP growth forecast for FY22 by 10 basis points from 9.2 per cent. Madan Sabnavis, Chief Economist, Bank of Baroda, said a permanent rise of 10 per cent in the crude basket could push up WPI-based inflation by 1.2 per cent and CPI-based inflation by 0.3 to 0.4 per cent.
RBI will have to take measures to control inflation
After the recent Monetary Policy Committee meeting, RBI Governor Shaktikanta Das had said that inflation is expected to be 4.5 per cent in FY2023. But in the absence of current geopolitical tensions, the RBI did not foresee the risk of inflation going up in the coming months. Now RBI may have to take some big decisions to control inflation.
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