Mumbai: Presenting the monetary policy report, Reserve Bank of India (RBI) Governor Shaktikanta Das said that today’s globalization of inflation coincides with business disruption.
“Successful shocks to the global economy today are taking their toll in the context of rising globalized inflation, tighter financial conditions, a rapid appreciation of the US dollar and low growth across geographies. The pandemic and the war have ignited tendencies towards greater fragmentation, reshoring of supply chains and retrenchment of capital flows, which will pose long-term challenges to both globalization and the global economy,” Das added.
The RBI governor further said that in view of the rising risks to the global economy, multilateral institutions including the International Monetary Fund (IMF) have revised downwards the global growth projections and highlighted the risks of a recession.
Elaborating on the potential risks to emerging market economies, he said these risks are magnified as they face both domestic growth inflation trade-offs and spillovers from the most synchronous monetary policy across the world.
“Emerging market economies are also facing a rapid tightening of external financial conditions. capital outflows, currency depreciations and reserve losses — all happening simultaneously. Some of them are also facing mounting burdens of debt and default. elevated food and energy prices and shortages are rendering their populations vulnerable to the insecurity of livelihood,” he said.