India An Oasis In Global Economic Uncertainty: SBI Research Report

The world is reeling from inflation with food and energy prices going through the roof. Central banks across the countries are in the midst of a rate hike cycle while the cost of owning a house has skyrocketed. However, despite these macroeconomic shocks, India still stands “like an oasis in this era of uncertainty,” according to the latest report by SBI Ecowrap published on 2 December 2022.

The report, authored by Group Chief Economic Advisor of SBI Group, Soumya Kanti Ghosh, said the “word good may have temporarily vanished from the global economy”, and the prevailing uncertainty has cast “an enormous spell of hardships across countries”.

“However, the good thing is that India still stands like an oasis in this era of uncertainty,” it added.

“Clearly, there has been a deterioration in cost of living in the aftermath of global mayhem, but India still performs significantly better compared with countries supposed to be the epitome of sound macro management,” it further said.

The report compared the cost of living in India with the US, UK, and Germany and stated that if the household budget of living was Rs100 in September 2021 across all countries.

It has now increased by Rs12 in both US and India, but it has increased by Rs20 in Germany and Rs23 in the UK. And in terms of energy prices, “What cost Rs100 in September 2021 across countries, is now up by Rs12 in the US, a staggering Rs93 in the UK and Rs62 in Germany and RS16 in India”.

The report made a comparison among the four global economies by adjusting each country’s exchange rate to achieve parity with the rupee. The Housing CPI index of each country has also been transformed with respective changes in exchange rates in comparison to the Rupee, it has been observed that the cost of living Housing has increased by Rs21 in the US, Rs6 in India, Rs30 in the UK, and Rs21 in Germany in the last one year.

“There has been a deterioration in cost of living in the aftermath of global mayhem, but India still performs significantly better compared with countries supposed to be the epitome of sound macro management,” the report highlighted.

Further, pointing out the per capita income of India with respect to the cost of living, the report observed that the PCI of the country in the past eight years has jumped by 57% in dollar terms.

The report added that the US job market is strong and the Fed may have to do a few more rate hikes to have a firm grip on labor market.

“India has remained remarkably resilient with 72% of the $14.7 billion capital outflows till July 29 in FY23 has already been recovered,” it mentioned.