The Reserve Bank of India (RBI) stated in its November bulletin that the world economy is slowing down in the final quarter of 2023 as manufacturing stagnates and the post-pandemic recovery of the services sector appears to be coming to an end.
Additionally, it stated that the global picture is significantly risked going into the future by tightening financial conditions.
RBI, however, said in its 'State of the Economy' article that "in India, the momentum of the change in GDP is sequentially expected to be higher in Q3:2023-24, with festival demand remaining ebullient".
The RBI stated that the deep sense of uncertainty that has been prevalent recently as wars flare has damaged consumer and corporate confidence, noting that the labour markets are showing indications of weakening.
As per RBI, the 'litany of challenges for the global economy' has been compounded by the geopolitical concerns arising from the conflict in West Asia and the ongoing war between Russia and Ukraine.
"The global economy continues to face multiple macroeconomic and geopolitical shocks. The prediction of a global recession has not come true but there are indications that global growth is slowing down amid tightening financial conditions and still elevated inflation," RBI Governor Shaktikanta Das said.
India's development is still "on track," according to Das, but inflation is starting to decline while being higher than the median objective of 4 per cent.
India's retail inflation figures for September and October were 5.9 per cent and 4.9 per cent, respectively. This moderation, according to Das, is a "welcome relief" from the averages of 6.7 per cent and 7.1 per cent observed in FY23 and July–August 2023, respectively.
The central bank went on to say that China is stagnating and Europe seems to be on the verge of a recession.