Economy resilient, but sensitive to global headwinds, says RBI article

With headline inflation beginning to show signs of easing, the domestic macroeconomic outlook appears to be resilient though it is still sensitive to global headwinds, an RBI article said on Friday.

The article published in the latest RBI bulletin also said the outlook for the global economy remains clouded with downside risks. Global financial conditions have been tightening and deteriorating market liquidity is amplifying financial price movements.

Markets are now pricing in moderate increases in policy rates and risk-on appetite has returned. In India, supply responses in the economy are gaining strength, it noted.

"With headline inflation beginning to show signs of easing, the domestic macroeconomic outlook can best be characterised as resilient but sensitive to formidable global headwinds," the article said.

Urban demand appears robust, while rural demand is muted but more recently picking up traction, it added.

The article has been prepared by a team led by RBI Deputy Governor Michael Debabrata Patra.

The RBI, however, said the opinions expressed in the article are those of the authors and do not represent the views of the central bank.