Global experts now warn that India, as one of the world’s fastest-growing economies, is entering dangerous waters
India’s economy is facing one of its harshest jolts in recent years as the ongoing global conflict sparks panic across financial markets. The rupee is wobbling, investors are pulling back, and major sectors are taking hits.
Global experts now warn that India, as one of the world’s fastest-growing economies, is entering dangerous waters — with aftershocks likely to hit trade, inflation, and growth in the coming months.
Bloomberg: India Has More to Lose Economically
Bloomberg reported that while both India and Pakistan possess military capabilities, India stands to lose more economically due to its larger and more integrated economy. The outlet noted that India’s GDP is over eight times that of Pakistan’s, making it more susceptible to economic shocks from prolonged conflicts. Bloomberg also highlighted that India’s aspirations to become a global manufacturing hub could be jeopardized by regional instability.
Standard & Poor’s: Conflict Could Deter Foreign Investment
The credit rating agency Standard & Poor’s warned that an extended conflict might undermine India’s attractiveness to foreign investors. The agency emphasized that geopolitical tensions could lead investors to reconsider their positions, especially those looking to diversify supply chains away from China.
Eurasia Group: Pakistan Can Disrupt India’s Economic Ambitions
Pramit Pal Chaudhuri from the Eurasia Group highlighted that despite Pakistan’s economic challenges, it retains the capacity to disrupt India’s efforts to position itself as a key player in global supply chains. He noted that such disruptions could add to LIndia’s risk premium, potentially deterring foreign investment.
Reuters: Rupee Suffers Amid Escalating Tensions
Reuters reported that the Indian rupee experienced its worst single-day decline in over two years amid escalating tensions with Pakistan. The currency dropped 1% to close at 85.71 against the U.S. dollar, reflecting investor concerns over the potential economic fallout from the conflict.
Economic Times: Foreign Investors Reassess Amid War Drums
The Economic Times highlighted that foreign institutional investors, who had recently injected over ₹50,000 crore into Indian markets, might reconsider their positions due to the rising geopolitical tensions. The potential for conflict could prompt a pullback to mitigate exposure, threatening recent market gains.