According to a report released by the UN, India’s projected economic growth for 2022 has been reduced by more than 2% to 4.6 percent, a decrease attributed to the ongoing war in Ukraine, with New Delhi expected to face restraints on energy access and prices, reactions to trade sanctions, food inflation, tightening policies, and financial instability.
The United Nations Conference on Trade and Development (UNCTAD) study reduced its global economic growth forecast for 2022 to 2.6 percent from 3.6 percent owing to shocks from the Ukraine crisis and changes in macroeconomic policies that put poor nations in particular at risk.
While Russia is anticipated to enter a serious recession this year, considerable economic slowdowns are expected in portions of Western Europe, Central, South, and South-East Asia, according to the analysis. UNCTAD has lowered India’s growth outlook to 4.6 percent in 2022 from 6.7% in 2022.
According to the paper, while some other economies in South and Western Asia may profit from the rapid increases in energy demand and pricing, they will be limited by adversities in primary commodities markets, particularly food inflation, and will be further harmed by underlying financial instability.
“India, in particular, will face restraints on several fronts: energy access and prices, primary commodity bottlenecks, reflexes from trade sanctions, food inflation, tightening policies, and financial instability,” it said.
According to the report, the United States’ GDP growth rate has been reduced from 3% to 2.4%. China’s growth rate would also fall to 4.8 percent from 5.7 percent. According to the estimate, Russia will enter a deep recession, with growth slowing from 2.3 percent to -7.3 percent.
According to the report, the sanctions put severe external restraints on the Russian economy. While Russia continues to export oil and gas and will thus experience commensurate gains in revenue owing to high prices, sanctions significantly limit the use of foreign exchange revenues for the purchase of imports or debt servicing.
Russia will face an acute shortage of a wide variety of imported products, rising inflation, and a significantly weakened currency. While the government will most likely try to soften the blow and prevent unemployment and household income declines, its power is limited.
“Trade with China and some other partners will continue, but they will not be able to provide substitutes for the wide range of imported goods that the Russian Federation currently cannot access. Assuming the sanctions remain in place through 2022, even if the fighting in Ukraine ends, Russia will experience a severe recession,” it said.
According to the research, a number of developing-country central banks have also participated in quantitative easing, which is the active purchase of bonds on the open market.