India 'Very Vulnerable' In Short Term Amid Oil Shock, Says Trinh Nguyen

India faces significant near-term economic vulnerability as surging crude prices strain its external accounts, Trinh Nguyen, senior economist for emerging Asia at Natixis, has told NDTV Profit — even as she argued the oil shock itself was unlikely to persist.

Her warning comes as the government has already begun invoking crisis management instincts. Prime Minister Narendra Modi, on Sunday, urged citizens to carpool, work from home, cut foreign travel and avoid non-essential gold purchases — measures that echo the Covid-era playbook — as part of a national drive to conserve foreign exchange. 

The appeal underscores the severity of the moment: India imports approximately 85% of its crude oil, and every $10 per barrel sustained rise in oil prices can widen the current account deficit by as much as 50 basis points.

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The Silver Lining

Nguyen acknowledged these pressures but cautioned against excessive pessimism on the broader asset class. Valuations were becoming attractive in select emerging markets, she noted, and recent shocks had been buffered by diverging macro factors across economies, keeping asset performance relatively resilient.
On India's longer arc, the Natixis economist remained constructive, reiterating its credentials as a durable growth story. 

The economist stressed that the country needed to build a stronger manufacturing and export base — products, not just services — to reduce structural dependence on imported energy and drive sustainable economic expansion. 

Gold, she added, had historically performed well in precisely such uncertain environments.

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