Last week, several significant economic data releases impacted global markets. Here’s an analysis of the data and its potential impact on the Indian economy.

Highlights Latest Economic Data

US Economic Data- The US Consumer Price Index (CPI) in March grew 5% YoY, lower than expected. However, the Producer Price Index (PPI) increased by 2.7% YoY in March 2023, lower than the previous month and expectations. The slower growth in wages and higher initial jobless claims may weaken consumption support in the US service industry. The weaker US economic data could provide India with an opportunity to increase its exports to the US market.
Eurozone Economic Data- Industrial output in the eurozone rose 1.5% MoM in February 2023, exceeding expectations. However, there are concerns over high inflation and high-interest rates that may lead to a recession. As India’s export destination, the eurozone’s economic performance can impact India’s export revenues.
Chinese Economic Data- China’s CPI increased 0.7% YoY and decreased 0.3% MoM in March 2023. This demonstrates that moderate recovery in resident consumption is still occurring. Additionally, deposits made by families increased by 9.9 trillion yuan, showing that locals’ inclination to save money remained robust. India’s top trading partner for imports is China, and any slowdown there could influence India’s export and import industries.

OFB’s Insight

The slowing economies of the US and eurozone may influence India’s imports and exports, while China’s economy is gradually improving. If the US dollar weakens, it could be advantageous for India’s exports to the US. Nevertheless, India should be cautious about the possibility of inflation in the eurozone and a potential recession, which could negatively impact exports to that region. To ensure sustainable growth, India must keep a close eye on global economic developments.