India’s International Economic Resilience Improves To Second Position: PHD Chamber

Despite the massive disruptions in both demand and supply side factors in the backdrop of COVID-19 pandemic and further geopolitical distress, India’s International Economic Resilience has improved to second position in 2022 as compared to third position last year.

“India, through its effective dynamic policy environment, is the only economy among the top ten leading economies which has shown consistent improvement in its macroeconomic performance during the last four years despite global economic crisis of COVID-19 and recent geo-political developments,” said Pradeep Multani, President, PHD Chamber of Commerce and Industry.

The conjuncture of COVID-19 led to an economic crisis and the intensifying geopolitical distress have exposed the world economy to a diverse range of domestic and external vulnerabilities. At this juncture, the rank analysis of International Economic Resilience (IER), based on the five lead macroeconomic indicators, for each of the years of 2019, 2020, 2021 and 2022 suggests that India’s macroeconomic endurance has consistently improved over the last few years as compared to the other leading economies in the world, and India is projected to improve to the IER rank of second for the year 2022, says an analysis conducted by the industry body PHD Chamber of Commerce and Industry.

The report released by PHDCCI, titled ‘Pre and Post COVID Economic Dynamics of Leading Economies’, is based on the comparative analysis of the leading economies’ resilience conducted on the basis of the five leading economic parameters, Real GDP growth Rate parameter, Merchandise Export Volume Growth rate, Current Account Balance, General government net lending and borrowing, and Gross Debt to GDP ratio.

India’s greater and stronger supply-side interventions helped to improve its factors’ mobility. The pace of economic activity remains strong due to the structural reforms undertaken by the government during the last two years, said the report.

Going ahead, extracting the innate robustness of its underlying fundamentals and supported by a pragmatic and encouraging policy mix, Indian economy is projected to continue to grow at the fastest rate as compared to other leading economies in the world.

As per the International Monetary Fund (IMF) estimates of April 2022 World Economic Outlook (WEO), India’s real GDP growth rate and merchandise export growth rate for 2022 are projected to be the strongest at 8.2 per cent and 7.0 per cent respectively, Multani said.

He said that further expansion of trade and industry would be imperative to sustain the growing economic momentum. Further encouragement to MSMEs, agricultural and manufacturing sectors to make Indian supply chains more diverse will go a long way in realizing India’s economic recovery, further strengthening its economic resilience, and thus allowing for its even faster adaptation to such unprecedented times.

“There is a greater need for the Indian economy to focus more on long-term growth prospects which would help leverage the ever-evolving geostrategic opportunities,” he said.

It is suggested that India calibrate its economic policies in such a way that helps to take advantage of its external economic environment to foster an even stronger internal transformation. Further, even a more pronounced thrust on prioritising innovation would be a vital ingredient to unlock post COVID economic growth, Multani said.

Therefore, further improvement in ease of doing business would help uplift business confidence and pull a larger number of both domestic and foreign investments to the Indian economy, he added.