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India better placed to avoid risk of stagflation: RBI officials

-The Hindu

Domestic economic activity is gaining strength, write authors of Bulletin article

India’s economy is better placed than many other countries to avoid the risk of potential stagflation, Reserve Bank of India (RBI) officials headed by Deputy Governor Michael D. Patra wrote in an article in the June edition of the RBI Bulletin.

“Global economic conditions continued to deteriorate as ratcheting up of commodity prices and financial market volatility have led to heightened uncertainty,” the officials wrote in ‘State of the Economy’. “Forecasts of global growth and inflation by various agencies paint a grim picture and it is increasingly becoming clear that in advanced economies, the war against inflation would entail significant monetary tightening, complicating the growth-inflation outlook,” they added.

“Emerging market economies grapple with the global trade slowdown, capital outflows and imported inflation. Some abatement of supply chain pressures and relaxation in lockdown measures by key industrial hubs have emerged as silver linings amidst the dark clouds looming over the global economy,” they observed.

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