The global economic fallout from the Ukraine war is projected to have a negative impact on India's economy, but the conflict's immediate impact on China is likely to be minimal, the IMF said.

"The global economic fallout from the war is expected to have a negative impact on India's economy in a variety of ways that are distinct from the channels through which the Indian economy was impacted during COVID-19," Gerry Rice, Director of the International Monetary Fund's Communications Department, told reporters.

Rice stated that the sudden increase in global oil prices is a significant trade shock with macroeconomic consequences. It will result in a rise in prices and a widening of the current account deficit, he declared on February 24, as Russia launched a "special military operation" against Ukraine. "However, the impact on the current account may be substantially offset by favourable swings in the prices of commodities India exports, such as wheat," he explained.

Rice stated that the negative impact of the Ukraine war on the economy of the United States, the European Union, and China could decrease external demand for India's exports, while supply chain disruptions could have a negative influence on India's import volumes and pricing. "There is also the issue of tightening financial conditions and increased uncertainty, which can have a negative impact on domestic demand and the fiscal position via higher borrowing costs and diminished confidence," he added.

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