West Asia conflict, supply chain disruptions may pose challenges to economy: RBI bulletin

The Reserve Bank of India (RBI) bulletin on Thursday stated that the ongoing conflict in West Asia and supply chain disruptions could pose challenges for the domestic economy in the form of increased energy costs, pressure on input costs, interruptions in trade flows and financial market spillovers.

The bulletin outlined that the conflict in West Asia has intensified pressures on the global supply chains in March with some easing observed in the first half of April.

Domestic economic activity displayed resilience in many segments with slowdown in a few others. CPI inflation, driven by fuel and food, marginally edged up in March, it stated.

“The money market and bond yields moderated after the temporary ceasefire in West Asia. A slowdown in imports and expansion in exports narrowed trade deficit to a nine-month low. Foreign portfolio investment (FPI) flows remained volatile, although net foreign direct investment (FDI) turned positive in February,” as per the RBI bulletin.

The RBI highlighted that the views expressed in the bulletin article are of the authors and do not represent the views of the Reserve Bank of India.

Earlier, on April 21, Sanjay Malhotra, Governor of RBI, said, “The resilience of the Indian economy is not by chance. It is because of the robust policy frameworks that have been successfully developed. It is due to the strong and credible institutions that have been assiduously built. It is on account of the various reforms undertaken steadily over the years. It rests on a foundation of stability and inclusion.”