Edu-Visor :War in Ukraine to lower growth, increase inflationary pressures globally

Finance


War in Ukraine to lower growth, increase inflationary pressures globally

The ongoing conflict in Ukraine is set to lower global growth prospects and increase inflationary pressures across the world, according to global advisory firm KPMG's latest Global Economic Outlook.

The bi-annual report provides economic forecasts and analysis from the global organization's team of economists in territories and regions throughout the world.

In the report, it warns that progress on global issues including public health and climate change has slowed as political and business leaders grapple with the broad implications of the war in Ukraine.

"The global economy emerged from the Covid-19 recession with higher public debt and as central banks raise interest rates, the servicing cost of sovereign debt also increases, making it particularly challenging for emerging countries whose debt is denominated in an appreciating US dollar," it said.

With policymakers and many businesses still reeling from the consequences of the pandemic, they are less ready to counter another significant economic shock, it opined.

On the global economic outlook, it said that the next two years will depend on how the conflict between Russia and Ukraine evolves.

"Before the outbreak of war in Ukraine, different territories and regions were at different stages of their post-Covid-19 economic recovery, and that is reflected in the analysis from our Chief Economists. But, while GDP forecasting varies, there are a number of clear, consistent themes and threats facing the planet. Armed conflict may currently be restricted to Eastern Europe, but it's already having far-reaching consequences for all nations," said Gary Reader, Global Head of Clients and Market .

While shortages will impact every territory, Reader anticipates a disproportionate impact on some of the world's poorest places and people, compounding long-term challenges for the planet's collective recovery.

On the Indian economy, the report said it is expected to continue its positive growth trajectory, however, recent geopolitical developments have hurted domestic stock indices and created volatility in crude oil prices and exchange rates.

"Given India's import dependence on crude oil, natural gas, and other commodities, a spike in inflation and in the current account deficit are aspects to be watched, particularly given the evolving geopolitical situation."

Furthermore, uncertainty about the fourth wave and virus mutations pose a significant risk for future growth of the Indian economy

Team Edu-Visor