RUSSIA-UKRAINE CONFLICT: RESULT FOR THE INDIAN ECONOMY
Abstract
History has demonstrated that following a conflict, markets do recover. History has not taught us how to foretell how a battle will end or what its repercussions will be. The Russian invasion of Ukraine has sent tremors across world markets. Russia and Ukraine produce 37% of the world's palladium, 17% of its natural gas, 13% of its wheat, 12% of its oil, and 9% of its nickel, but they only represent less than 2% of global trade. The supply chain connections and the sanctions on Russia will undoubtedly have an impact on world trade and banking. The main source of worry for the Indian economy is the impact on commodities, especially energy. Rising petroleum costs invariably cause the rupee to lose value, inflation to rise, the budget deficit to widen, and GDP growth to slow. A 10% increase in oil prices is expected to aggravate the current account deficit, slow GDP growth by 20 basis points, and boost inflation by 40 basis points. This article examines the impact of the Russian-Ukrainian War on the Indian Economy.
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