The global recession is unlikely to happen as the inherent resilience of individual economies has withstood the pressures much better, said RBI Governor Shaktikanta Das on Thursday. He said after COVID-19, the Ukraine war, and the spike in inflation, there was widespread apprehension that the world economy may plunge into recession.
“That has not happened. Because, inherent resilience of individual economies, both advanced economies as well as emerging market economies, have withstood the pressures much better. So, therefore, recession has not happened and is unlikely to happen. Nonetheless, growth has slowed down,” he said while speaking to Business Today TV’s Managing Editor Siddharth Zarabi on the sidelines of the World Economic Forum (WEF) at Davos.
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Globally, he said, inflation is coming down and that is a matter of satisfaction for every central bank for every country. “But at the same time, individual countries are yet to reach their target rates. It’s the last mile, which is proving to be challenging. The mood is a lot better, but at the same time there is the mood of cautiousness about how the future will play out more so in the background of continuing geopolitical tensions.”
Das said India’s retail inflation has moderated and it is within the target zone. “We are moving towards 4%. The GDP growth has revived – three successive years, including this year. Also, our expectation is that the GDP growth will be about 7% (in FY 24-25),” he said when asked about India’s growth story. “The India story is definitely a story of greater resilience compared to the rest of the world.”
Speaking on the better-than-expected economic growth in the previous quarter and his forecast for the full year, the Governor said the RBI had projected 7 per cent towards the end of October 2023. “Our previous projection for the current year was 6.5 per cent, but we projected 7 per cent in October and December. The projection given by the National Statistical Office (NSO) came in January. NSO had its data for one more month. They have access to a lot of other data to which we don’t have access. The growth in the current year will be around 7.3 per cent.”
In the second quarter, India’s economy expanded 7.6 per cent, exceeding all expectations. Das said the momentum of economic activity is still holding its ground and continues to be quite strong. “And that gave us the confidence, to put it very briefly, to say that next year’s growth will also touch 7 per cent.”
Inflation
The Governor said the country’s retail inflation is moderating, and this trend of moderation towards 4 per cent will continue. He said in the next financial year 2024-25, the average inflation will be 4.5 per cent. “The core inflation has also moderated significantly. It has come around 3.8 per cent or so. It’s food inflation which needs careful monitoring because food inflation is exposed to external risk factors – disruption in supply chain and weather-related events.”
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