As Jeff Bezos Warns About Global Recession, Here’s How India Might Fare

As Jeff Bezos warns of a global recession, here's how India can fare

India may benefit from a fall in commodity prices led by recession. (file)

New Delhi:

Amazon founder Jeff Bezos’ advice for consumers to keep cash safe and avoid unnecessary spending has reaffirmed fears the US economy is headed for recession.

Fears of a recession in the world’s largest economy have rallied markets. High inflation first sparked concern in the wake of the energy crisis caused by the Russia-Ukraine war. Large-scale technology layoffs have fueled fears. Jeff Bezos’ comments came as Goldman Sachs predicted the US would narrowly avoid a recession.

India’s policymakers seemed confident that growth prospects were bright. While the finance ministry has initiated budget consultations with industry stakeholders, Niti Aayog vice-chairman Rajeev Kumar said there is little chance of a recession in India, though India’s growth could be negatively affected by global conditions.

“We will still manage to grow at 6-7 per cent in 2023-24,” he said.

Finance Minister Nirmala Sitharaman’s next budget will have a recession in the US.

India is not immune to global recessions or recessions that affect trade, commodity prices and capital flows.

The previous recession/slowdown said that auto and accessories, metals, textiles, etc. were affected, but gems and jewellery, chemicals and pharmaceuticals were rather strong, according to Kotak research.

“Historically, discretionary spending items have exhibited higher volatility than staples,” Kotak said in the report.

“Lower exports and relatively strong domestic growth (hence, higher imports) risk worsening the external balance. Exports have helped bring GDP (Gross Domestic Product) back to pre-pandemic levels. We maintain our real GDP growth estimates for FY2023-24. 6.8-6% with downside risks in the near term due to external sector headwinds,” Kotak said.

India may benefit from a fall in commodity prices led by recession. An implied result of a recession will be lower prices as demand falls.

“In a global recession situation, it is expected that commodity prices will fall,” Kotak said.

Although a disruption in exports may dampen output growth and consumption somewhat, due to less dependence on exports, India will be a relatively preferred destination for foreign fund inflows, especially when compared to export-oriented economies.

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