New Delhi According to an analysis by EY, the economies of the US and the European Union are headed for recession in the near future, which may pose a challenge for the Indian economy, especially in exports.
As India emerges from the Covid shock, its immediate challenges are related to rising global crude oil prices and significant supply-side disruptions, but these problems are shared with the world’s major economies. In comparison, India is expected to perform well in the short to medium term. Its projected growth in FY 2013 is 8.2% as per IMF and 7.2% as per RBI. Even at this low level, India will be the global growth leader among the world’s major economies, the analysis said.
However, an additional challenge may arise for the Indian economy, especially in terms of its export prospects, if the US and European economies go into recession over the next few years, the analysis said. “This is an anticipated outcome of their policy response to raising interest rates to manage the unprecedented inflation levels that they are currently experiencing,” EY said in its monthly update on the economy.
The analysis said that in the medium term, India is projected to show the highest growth rate till FY28. Its growth rate is expected to be above the world average as well as that of China. In the long run too, India’s economic prospects look promising, with significant positive results from the demographic and democratic dividend windows, the analysis said.
The analysis states that in 2028, the share of the working age population in India will overtake China at 68.4% and in 2058, India will have the maximum share of the working age population as compared to China.