OPEC stated in its monthly Oil Market Report for March 2022 that, considering recent global economic developments, namely increases in energy and food prices as well as the uncertainties related to the near-term path of COVID-19, India's near-term economic outlook remains cautious. The weakness of Omicron variant might help in reducing pressure on the labour force as Omicron is unlikely to lead to substantial increases in hospitalisation rate.
However, rising energy prices fuelled by the recent geopolitical tension could put more pressure on the India's current account balance since the country is heavily dependent on imports to meet its energy requirements. Indeed, India imports more than 80% of its crude oil needs. Moreover, the higher the energy prices, the more the already elevating inflation rate becomes worrisome, especially for food items.
For this month's update, OPEC noted that India's 2022 GDP growth is kept unchanged at 7.2%, addressing the upside potential supported by increasing vaccination rates as well as anticipated fiscal support. The downside risk is mostly related to global economic uncertainties driven by geopolitical tensions and cautious domestic consumption activities.
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