Daily Management Review

Rise in oil prices overshadows India's economic outlook


08/28/2018


Rising oil prices will increase India's current account deficit, continue to exert pressure on its already weakened currency and affect the prospects for economic growth, CNBC reports.



Pogaface
Pogaface
Restoring oil prices and India's high demand for it will push up oil imports and increase the country's current account deficit, economists predict.

This growing deficit will lead to a weakening of the rupee, as an increase in imports means that India must buy more foreign currency to meet its needs.

"It is expected that INR (Indian rupee) will continue to face downward pressure during the remainder of 2018, reflecting several factors, including further increases in US Federal Reserve rates, an increase in India's current account deficit and negative sentiment of investors over currencies and assets developing countries, "said Rajiv Biswas, IHS Markit's chief economist for the Asia-Pacific region, CNBC.

According to his forecasts, the rate of the rupee will fall to 72 per dollar by the end of 2018 and will reach 74 per dollar by August 2019. 

"The difficult global conditions forced the Reserve Bank of India to actively intervene this year to contain the weakening of the rupee... The reduction in foreign exchange reserves was significant," DBS analysts said.

Wood Mackenzie predicts that India by 2024 will become the world's largest consumer of oil, ahead of China.

India's demand for oil is expected to grow by 3.5 million barrels per day between 2017 and 2035. Thus, the country will account for more than 30% of the world growth in oil demand, said Director of Research at Wood Mackenzie.

"The steady growth in per capita consumption has strengthened the position of [India] as one of the world's largest oil importers, making the economy vulnerable to fluctuations in world oil prices," the Oxford Economics report said.

"India needs to reduce demand for oil and, in turn, imports, to make [economic] growth more resilient to higher oil prices, but we think this is unlikely in the next ten years," the report says.

source: cnbc.com






Science & Technology

Is UAV drone industry falling into decay?

UK Scotland Yard employs AI to deal with frauds

US sets to fight robocalls outbreak

Top 7 green energy innovators

Volvo’s New Car Uses Blockchain For Recycled Cobalt

False Memories Can Be Created By Fake News On Social Media, Shows A Study

DEF CON Hosts Auto-Makers And Cybersecurity Enthusiasts

WHO found no danger in microplastics in drinking water

Apple starts testing Chinese OLED screens for iPhone 12

Analysts: Google Search is losing clicks

World Politics

World & Politics

US FAA invites representatives from 50 countries to discuss 737 MAX certification

Iran Blamed By US’s Pompeo For The Drone Attacks On Saudi Oil Facility

IMF: Georgieva is the only candidate to replace Lagarde

Saudi Arabia to issue tourist visas

USA introduces sanctions against Iranian space agencies

Investments continue to flow into Cape Verde and exceed expectations of Minister of Finance Olavo Correia

USA, UK to create a working group on economics

Global Fashion Companies Support Environment Protection At G7 Summit