Though a number of economies are at risk of facing a recession in the next one year as higher prices are prompting central banks to raise interest rates, a Bloomberg survey of economists shows that India has zero probability of slipping into the crisis. In general, Asia faces 20-25 per cent chance of witnessing a recession in the next one year.
According to the survey, Sri Lanka, which is already facing a major financial crisis, has as much as 85 per cent probability of getting into a recession in the next one year. The survey also showed chances of the recession in New Zealand, Taiwan, Australia and the Philippines to 33 per cent, 20 per cent, 20 per cent and 8 per cent, respectively. The survey showed a 20 per cent probability of China slipping into a recession in the next one year, and a 25 per cent likelihood that South Korea or Japan will enter one.
Overall, Asia faces 20-25 per cent chance of witnessing a recession in the next one year, while the odds of the US entering it is around 40 per cent. Europe has a 50-55 per cent risk.
According to a recent news18.com report also, economists here believe that the impact on India will be moderate and short-term. In fact, they say that the recession will pull down the prices of commodities globally, which can help the country sail through tough economic times.
Crisil Chief Economist D K Joshi has told news18.com that the impact of a US recession on India will depend on the magnitude of the recession and how big the recession is. “As of now, the US recession is likely to be a shallow one. It can slow down India’s exports but will also lower commodity prices globally which is positive. So, for now, the recession is likely to be shallow and its impact will be moderate on India.”
Bank of Baroda Chief Economist Madan Sabnavis has said India might see a slowdown (slow growth) for some time but not a recession (negative growth) for now. “The overall impact of the recession on India will not be significant, as, among other factors, global commodity prices will also fall, which is positive. India’s exports will, however, be affected negatively due to heavy dependence on the EU and the US as export markets, and the global trade will slow.”
Sabnavis has also said India’s domestic economic factors are positive that can insulate India from any major negative impact of a global adverse economic event.
Brent crude futures for September currently stands at $106.66 a barrel, which is lower than $121 per barrel recently. However, on Tuesday, it got costlier for a second day on increasing concerns about tightening European supply after Russia, a key oil and natural gas supplier to the region, cut gas supply through a major pipeline.
Several brokerages have given their forecasts on the US economy getting into recession in the next one year. US-based brokerage firm Goldman Sachs in its report has said it sees a 30 per cent probability of US entering a recession in the next year and a 25 per cent conditional probability in the second year if one is avoided in the first. Bank of America Securities also sees a roughly 40 per cent chance of a US recession next year, with inflation remaining persistently high.
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