- Saturday, April 27, 2024
By: Shubham Ghosh
IN a viewpoint that would leave the experts worried, French multinational investment bank Societe Generale on Monday (25) said that India is the most vulnerable economy in the Asia emerging market (EM) space at a time of high inflation and twin deficits, Moneycontrol News reported.
India economist Kunal Kumar Kundu and EM strategist Vijay Vikram Kannan said countries such as Thailand and the Philippines also suffer because of same factors while Indonesia and Malaysia look more resilient because of their relatively low inflation and commodity exports. China follows them, the experts said.
India is at the 10th place and preceded by Indonesia, Malaysia, China, Taiwan, Vietnam, Singapore, South Korea, Thailand and the Philippines.
The rankings are based on pressure of inflation, vulnerability to tightening financial conditions and exposure to growth risks and they correlate well with the year-to-date FX performance of these nations, Societe Generale said.
According to the analysts, India’s inflation gap — its central bank’s inflation target minus the core retail inflation — is at negative 2.4 percentage points while the output gap since the beginning of the pandemic is at 11.7 per cent.
The South Asian nation’s current account deficit is projected at 2.9 per cent of the gross domestic product (GDP) for 2022 while the general government fiscal deficit is seen at 9.9 per cent of the GDP.
Earlier this month, Kundu in an interview with Moneycontrol News said India’s growth prospects had taken a hit, thanks to the continuous stress faced by the so-called micro, small and medium enterprises and a weak recovery in domestic demand.
