The state of India’s economy could be described as resilient at best, as domestic inflationary pressures gradually ease while it faces “impressive headwinds” from volatile global financial markets, the Reserve Bank of India said in its October economic situation report.

“Headline indicators of economic activity point to continued resilience of the Indian economy in an uncertain and increasingly hostile global environment,” RBI said.

India, which recently overtook the UK as the fifth largest economy, is expected to post GDP growth of 6.1% in the September quarter.

“If this is realized, India is on track for a growth rate of around 7% in 2022-23. In the third quarter, supply-side responses in the economy are gaining strength,” the report said. However, the views presented in the report do not come from the central bank, but from researchers led by Deputy Governor Michael D. Patra, RBI said.

Recent data from across the Atlantic and from India point to a reluctant easing of inflationary pressures. Inflation has eased somewhat in the BRICS economies, as well as in several other emerging markets, benefiting from lower commodity prices, particularly food.

This prompted a rethink from central banks – some of which have slowed rate hikes and indicated that the end of rate hikes is in sight, the report noted.

“Some of them deliver ’75s’ but appease them with a dovish pivot after their 75 basis point rise. Delays in the transmission of monetary policy risk easing too soon when they see the outlook darkening, as outlined above.”

However, in its most recent Global Financial Stability Report, the International Monetary Fund highlighted two main risks to global financial stability – a disorderly tightening of financial conditions; and debt problems in emerging and frontier countries.

It has also been predicted that a third of the world economy will contract this year or next as medium-term forecasts show a deteriorating global economic outlook, with associated fears that a global poly-crisis looms.