While The West Slips Into Recession, India Stands Strong
There has long been a threat of a recession. The global economic slowdown was inevitable during the two years of the Covid-19 pandemic’s dominance of economic policies. Global supply chains could have been replenished on time to avoid the damage caused by the pandemic. No such thing seems to have happened. Despite that, there were still few signs of an outright recession.
World economies are now feeling the effects of the devastating war in Ukraine. As energy prices skyrocket and inflation rates spiral out of control, governments appear powerless to contain them. As well as the risk of food shortages, a food security crisis is also on the horizon for poor and developing countries.
As for the sanctions, they seem to be more damaging to the West than to Russia because they affect over 8,000 countries. Russia has been subject to sanctions for many years. Under Vladimir Putin’s leadership, Russia undertook a concerted effort after annexing Crimea in 2014 to become self-reliant and independent from Western influences.
It wasn’t a sudden event when the war broke out in Ukraine. Years of preparation led to Putin’s decision to give the go-ahead, only after he and his team were assured that their nation would be able to deal with an economic war that would wage against them in the future.
Russia’s economy, for example, has held up better than expected despite a wave of sanctions, according to the International Monetary Fund. Accordingly, cut down growth rates for almost all countries but upgraded Russia’s. According to the IMF, the Russian economy was expected to contract 8.5% in April.
As a result, Russia’s revised rate of contraction has increased by 2.5%, leaving it at 6%. Despite the loss of Western markets for Russian oil, the figure might improve even more in the months ahead if global energy prices continue to rise. There is an actual race between the West and the East regarding who will enter recession first.
Right now, the United States seems to be in the lead, but Europe seems to be close behind. Despite Joe Biden’s and his administration’s reluctance to acknowledge it, the world’s largest economy is now technically in recession. Two consecutive quarters of contraction have been observed in the United States economy in 2022 alone.
As a percentage of GDP, the U.S. economy contracted 1.6% in the first quarter. U.S. economic data released on Thursday showed a 0.9% decline in April-June. Meanwhile, Russia’s erratic natural gas supplies have caused intense stress for Europe.
A reduction of 40% in the capacity of Nord Stream 1 was first announced for gas supplies to Europe. In July, Moscow paused all supplies for close to ten days before restoring them. Throughout Europe, exhaled breaths of relief.
As a result of the energy shortage in Germany, natural gas reserves throughout the rest of the eurozone are running low. The winter months will be unmanageable without such resources. As a result of these events, Europe’s economy will be heavily impacted in the coming months.
Despite the record-high inflation rate in the eurozone, recorded economic growth was 0.7 percent in the second quarter. Will Europe follow the U.S. into negative growth soon? As a result, inflation is soaring, consumers’ purchasing power has plummeted, and industries are showing signs of production losses in the face of an energy crisis.
European countries will cut supplies to industries first if energy shortages become too severe. This will harm the economy. A Bloomberg survey indicates that Europe will face a 55% recession in the coming year. Nearly 40% of respondents to the same poll predicted a U.S. recession over the next year.
There is a 20% chance of slipping into recession for China, Taiwan, and Australia, while there is a 33% risk for New Zealand. Regarding India’s economy, Bloomberg’s survey makes a positive observation. A recession is unlikely to occur anytime soon in India. As noted in the Bloomberg survey, India’s chances of recession remain low despite the rupee breaching the 80-per-dollar mark against the dollar.
In April, the IMF estimated India’s economic growth at 8.2 percent; now, it is projected at 7.4 percent. However, India will continue to contribute to the global economy in 2022-23 and 2023-24. The dream of an Indian economy worth $5 trillion has been discussed a lot. Aatmanirbhar Bharat is a goal Narendra Modi has long advocated with the help of every Indian.
In 2024, IMF estimates that the Indian economy will grow to $4.7 trillion. As per Prime Minister Modi‘s plan, India would reach $5 trillion in the year 2015. As one of India’s most important goals in recent history approaches completion, it appears that it is making good progress.
India’s economy will reach $5.1 trillion by 2026, according to estimates. What is happening in the West significantly differs from what is happening in India. It is a global trend that economies are contracting. Several big names come to mind, such as the United States, the European Union, and perhaps even China.
While India’s economy is slowly but steadily growing towards $5 trillion, it is fast approaching its goal. The story is gloomy on the one hand and optimistic on the other. There is a sense of degradation in the West today – morally, politically, socially, and, most importantly, economically.
The Indian economy combines freshness, strength, and moral uprightness. We are witnessing a shift in the balance of power. Globalization is transforming the world. West will not be in a position of strength when the new order takes over.
Edited by Prakriti Arora