- Persistent West Asia conflict may raise energy costs and disrupt India's trade and markets
- RBI bulletin notes March supply chain pressures eased somewhat in early April
- Domestic economy shows resilience despite some sector slowdowns amid global tensions
Persistent conflict in West Asia and supply chain disruptions could pose challenges to the domestic economy in the form of higher energy costs, input cost pressures, disruption in trade flows and financial market spillovers, an RBI bulletin said on Thursday.
The conflict in West Asia has intensified pressures on the global supply chains in
March with some easing observed in the first half of April, said an article on 'State of the Economy' published in the Reserve Bank's April bulletin.
Domestic economic activity displayed resilience in many segments, with a slowdown in a few others, it said.
The intensity and duration of the conflict, as well as the resultant damage to energy and other infrastructure, add risk to the inflation and growth outlook, it added.
"If the conflict persists and supply chains are not restored early, it may create challenges to the domestic economy in the form of higher energy costs, input cost pressures, disruption in trade flows and financial market spillovers," the article said.
ALSO READ: Iran War Impact: S&P Global Sharply Reduces 2026 Oil Demand Forecast
Though inflation remains within the tolerance band, upside risks have increased, driven by supply-side disruptions, including weather-related uncertainties, it pointed out.
"Possible second-round effects with the supply shock transforming itself into a demand shock also warrant careful and continuous assessment. The temporary two-week ceasefire between the US and Iran has, however, provided some breather to the global economy," it said.
The strong macroeconomic fundamentals should support the Indian economy to maintain its resilience to withstand such shocks, according to the article.
The RBI said the views expressed in the Bulletin article are of the authors and do not represent the views of the central bank.
ALSO READ: Govt Says Oil PSUs Losing Rs 100/Litre On Diesel, Rs 20/Litre On Petrol; No Plans To Raise Prices
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.