MUMBAI (Reuters) – India’s economy has remained resilient in the face of global turmoil and with inflation easing recently it is expected to remain the world’s fastest growing economy, the Reserve Bank of India said on Saturday.

The recent revival of monsoon rains in the south-west and fresh replanting have led to rural expectations of a near-term recovery in urban spending and consolidation of the recovery, the RBI said in a bulletin.

“The consequences of geopolitical spillovers are being felt in several sectors, slowing the recovery,” the central bank said.

“Despite these major shocks, there is a headwind that ignites the economy’s inherent power and puts it on track to become the world’s fastest-growing economy, even if surrounded by fears of a collapse.”

It didn’t give time.

The RBI has said that if the improvement in commodity prices seen in recent weeks continues to reduce inflationary pressures, the recent increase in inflation will end.

India’s consumer spending remained painfully above 7% and above the central bank’s benchmark rate for the sixth consecutive month, data showed last week.

“There is some evidence now that supply pressures are intensifying globally and in India, so the main source of inflation is rising,” the bank said.

Regarding the impact of global commodity prices on India’s current account deficit (CAD), the RBI said CAD could grow to 2.3% of GDP in 2022/23 if oil prices are around $105 per barrel. It may increase to 2.8% if oil is around $120 per barrel but still “within the normal range of 3%”.

CAD stood at 1.2% of GDP in 2021/22, data released in June showed.

“External debt remains low as a share of GDP and declined between March 2021 and March 2022,” RBI said.

(Reporting by Swati Bhat; Editing by Mark Potter and Nick Macfie)

Copyright 2022 Thomson Reuters.

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