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Global Economic Outlook – September 2022 An uptick in domestic economic activity is observable, with Unemployment rates, however, surged to a 12-month high indicators of urban and rural demand such as automobile of close to 8.3% in August 2022. Rural unemployment, sales, consumer durables manufacture, and domestic which had been affected by factors such as erratic rainfall, air travel showing improvement. A positive movement in is expected to decrease towards the end of the monsoon domestic demand is discernible from the robust import season, as agricultural job opportunities increase. However, requirements for non-oil and non-gold commodities. Rising concerns around the trajectory of urban unemployment are consumer optimism, improved corporate performance, expected to persist in the immediate future. and enhanced demand for contact-intensive services are expected to drive consumption. Retail inflation, which was one of the highest in April 2022 (nearly 7.8%) due to the high prices of articles such as Investments are also rising in the country, and factors food and fuel, has witnessed a downward trend since May such as a capex push by the government, improvement 2022. The government’s reduction of excise duties on fuel in capacity utilization and widening of bank credit will in May, coupled with three interest rate hikes by RBI this contribute to ramping up investment activity. In addition, year to 5.4% have helped moderate inflation. However, the Foreign Portfolio Investors poured over INR56,000 crore central bank expects inflation to remain high in fiscal year (~US$7.1 billion) in August 2022 after nine months of 2022-23 at 6.7%, owing to effects of the global geopolitical continued outflows, indicating improved enthusiasm headwinds. Furthermore, the appreciation of the U.S. dollar of foreign investors for the Indian equity market, which is a factor contributing to inflationary pressures. became the fifth largest recently in terms of market capitalization. The government’s production-linked incentive (PLI) schemes are also promoting domestic manufacturing and job Chart 26: India’s Consumer Price Index creation, with investment commitments of INR2.34 lakh crore (~US$29.53 billion) as of April 2022. PLI schemes 9% are also being considered for additional sectors such as furniture and toys, which will help bolster domestic 8% manufacturing. 7% 6% Over the coming years, India is expected to continue on -on-year its path of economic growth and become a US$5 trillion 5% economy by 2027. However, geopolitical uncertainties and 4% tensions coupled with inflationary pressures and monetary 3% tightening in economies like the U.S. and elsewhere are CPI inflation, % year 2% cautionary factors that could affect growth estimates. 1% 0% Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Preeti Sitaram 2021 2022 Director, Government & Public Services, KPMG in India Source: Ministry of Statistics and Programme Implementation. Note: Inflation rate for July 2022 is provisional. © 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 27

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