India may face crude supply risk
If the war spreads across West Asia, the global trade may further slow down
image for illustrative purpose
Geo-political Challenges
♦ Resurgence of inflation risks
♦ Higher volatility in global mkts
♦ Indo-Israel bilateral trade is at $10 bn
♦ Bond yields will stay high
Chennai: Senior economists are in a wait and watch mode as to the impact of Israel - Hamas war on the Indian economy, while agreeing there may be a crude oil supply challenge if the war spreads across West Asia. They said it is a bit early to comment on the impact as the situation has to be monitored.
“In the worst case, there is also a likelihood of the conflict spreading across West Asia and involving several nations. That may lead to further supply challenges in crude oil where supply cuts by OPEC+ (Organisation of Petroleum Exporting Countries and other oil producing countries) have already led to a rise in global prices,” said Suman Chowdhury, the Chief Economist and Head of Research, Acuite Ratings & Research Ltd.
Chowdhury said with the rise in geo-political conflict, the global economy and trade may face further slowdown with a resurgence of inflation risks and higher volatility in the global markets which in turn can have an adverse effect on the rupee.
“However, the direct impact of the conflict is going to be limited as Israel’s trade with India is a little over $10 billion with exports to Israel at $8.5 billion and imports at $2.3 billion in FY23,” Chowdhury said.
