AhlulBayt News Agency (ABNA): India's economy has entered a more complex phase as the repercussions of the war in the Middle East expand, where the energy shock intersects with disruptions to trade and capital flows, exerting increasing pressure on one of the world's largest economies.
According to a report by Al Jazeera, indicators show that an economy that had benefited from strong growth and relative inflation moderation in recent months is now facing accelerating challenges, including rising energy costs and disruptions to vital maritime routes, at a time when markets have become more sensitive to any developments in the course of the war.
The Wall Street Journal has reported that disruptions to maritime transport in the Strait of Hormuz and rising energy costs could weaken the momentum of India’s economic growth, particularly after a period of relative stability.
Increased costs of oil imports, higher transportation expenses, and reduced exports to the region are among the direct pressures of the U.S. and Israeli war against Iran on India’s economy. At the same time, rising oil prices create unforeseen risks that could lead to increased inflation in the medium term.
The newspaper emphasizes that these factors, coupled with capital outflows, have exerted downward pressure on the Indian rupee, a matter that has compelled the Reserve Bank of India to intervene.
Data indicate a continued outflow of capital from India’s market in March, with approximately $12.5 billion in capital having exited the Indian market, amid a reduced global appetite for risk.
Bloomberg reported, citing Anantha Nageswaran, the chief economic adviser to the Indian government, that India’s economic growth forecast of 7 to 7.4 percent for the fiscal year ending March 2027 faces significant downside risks. Additionally, India’s current account deficit is expected to increase markedly.
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