19-10-2023 03:43 PM | Source: PR Agency
Quote on Economic impact of the ongoing Israel-Palestine war By Shantanu Bhargava, Waterfield Advisors
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Quote on Economic impact of the ongoing Israel-Palestine war - Shantanu Bhargava, Managing Director, Head of Discretionary Investment Services, Waterfield Advisors
What is the impact on the Indian economy?
India continues to enjoy relative macroeconomic stability at this moment but is vulnerable to one key risk - supply disruption in crude oil prices because of escalation in the war, resulting in a spike in crude oil prices.
High crude oil prices hurt India impacting currency stability (making imports expensive), possibly worsening the government’s fiscal deficit (the government is likely to absorb higher prices by cutting excise duty), widening the CAD further impacting currency adversely and affecting the profit margins of sectors such as aviation, paints, tyres and chemicals. All these implications could have a negative impact on economic growth in the short term, as high inflation and low profitability in various sectors would hit disposable incomes and discretionary spending.
The conflict is not affecting India's trade with Israel immediately. Should the battle escalate, supply-side issues may arise. India's 1.8% merchandise exports to Israel are mostly petroleum products. Israel imports $5.5–6 billion in refined hydrocarbons from India. India's exports to Israel were $8.4 billion in FY23. India imports equipment, pearls, diamonds, and other precious and semi-precious stones from Israel. India imported $2.3 billion from Israel in 2023.
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