Economic Buzz: Global macroeconomic environment remains fluid says RBI

The Reserve Bank of India (RBI) has stated in a latest update that global macroeconomic environment remained fluid in June and July so far. In the first fortnight of June, concerns about the rapid escalation of geopolitical tensions between Iran and Israel led to a marked uptick in market volatility. The announcement of a ceasefire on June 23, however, restored normalcy in global markets. Progress on several bilateral trade deals provided further impetus to the overall optimism. By early July, however, concerns around fiscal health of the US, tariff policy uncertainties and their implication for growth and inflation weighed on the evolving economic outlook. High-frequency indicators of global economic activity point to a modest expansion in manufacturing activity in June, after two months of contraction, alongside a robust expansion in services activity. Weak consumer and business confidence, however, raises apprehensions about the strength of the economic rebound, especially in view of the lingering global trade policy uncertainties. While food and other commodity prices rose, crude oil prices ebbed from their mid-June peak as geo-political tensions eased. Rally in global equity markets, which commenced following the ceasefire agreement between Iran and Israel, continued into July fuelled by optimism arising from progress on trade deals and strong early corporate results.

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