Standard Chartered’s Anubhuti Sahay and Saurav Anand assess India’s macro outlook as Middle East tensions raise risks for Oil and global rates. They keep India’s existing macro forecasts unchanged for now but warn that the external sector is vulnerable to crude above USD 100/bbl, with the Rupee (INR) expected to absorb shocks and policy possibly turning tighter.

Rupee, Oil and policy risks for India

"We maintain our macro forecasts for now amid uncertainty related to duration of the conflict and energy price equilibrium."

"The external sector is most at risk from prolonged conflict in the Middle East and crude oil prices above USD 100/bbl, in our view."

"We think INR has to be the shock absorber to limit the impact on the economy; mitigating measures to contain demand/the import bill are crucial too."

"Growth-inflation-fiscal dynamics to deteriorate but remain relatively better than in FY23 after the start of the Russia-Ukraine war."

"Risks may shift towards a policy rate hike rather than a pause/cut if energy prices stay elevated for long and/or global rates increase."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)