Global Economic Impact Index
Global Economic Impact Index
Current Phase
Weak Recovery
Index Value: 52.8
Summary
A weak recovery typically indicates a slow acceleration in the pace of global economic activity, characterised by a range of global factors that contribute to domestic economic activities.
Index Value (LHS)
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Current Phase
Weak Recovery
Index Value: 52.8
Summary
A weak recovery typically indicates a slow acceleration in the pace of global economic activity, characterised by a range of global factors that contribute to domestic economic activities.
Global Economic Impact Index
Showing: Index Value • Range: 10 Years
Index Value (LHS)
Overview
Recent Updates
- The INR slipped to around 95.9 per dollar, reaching an all time low as pressure returned from rising global oil prices and weakening risk sentiment.
- Net FPI outflows have exceeded ₹2 lakh crore (US$24 billion+) YTD, driven by elevated US bond yields, geopolitical uncertainty, stronger dollar conditions, and concerns regarding relatively high Indian equity valuations.
- India’s foreign exchange reserves declined to around US$642 billion in early May 2026 from their September 2025 peak of nearly US$704 billion, primarily due to RBI intervention to stabilise the rupee amid persistent FII outflows and elevated crude oil prices.
- Brent traded in a volatile $100-110/bbl range through April-May 2026 as the US-Israel-Iran conflict escalated. Given India’s high oil import dependence (~85–90%), this remains a critical vulnerability.
- External Commercial Borrowing (ECB) activity has moderated due to elevated global interest rates and tighter global financial conditions.
Near-term Outlook
- The Global Economic Impact Index suggests moderate external headwinds but strong domestic resilience, with India well-positioned to manage global volatility due to healthy macro buffers.
- Crude oil remains a critical risk factor; the sustained move above $100 per barrel will likely widen the current account deficit, pressure the rupee, and complicate inflation and fiscal dynamics.
- Slower growth in advanced economies and renewed geopolitical tensions add uncertainty to global investor behavior, potentially muting foreign investment flows into India.
Description
What is the Global Economic Impact Index?
Global Economic Impact Index offers insights into the domestic economy’s response to global developments and the ability to attract foreign investments by tracking indicators such as FPI investments, External Commercial Borrowings (ECBs), Forex reserves, Crude oil prices, and Trade balances. Global Economic Impact Index provides critical input for assessing India's resilience to withstand external adversities.
What are its components?
The index covers diverse economic parameters, covering both domestic and global economic developments, policy or geopolitical impact on Indian economy and investor sentiments. We have assigned appropriate weights to each of these indicators based on their relevance in reflecting the global economic developments.
Usability
How to use the Global Economic Impact Index for better financial decision-making?
Analysing the Global Economic Impact Index offers a comprehensive understanding of how global economic trends can affect the Indian economy. It is also crucial for individuals involved in sectors sensitive to international trade dynamics. It helps in making informed decisions related to investments, job security, foreign investments, liabilities management, and long-term financial planning.
Insights
Impact on Domestic Markets: Global economic conditions significantly influence stock markets, commodity prices, and foreign exchange rates. For instance, strong global growth can boost stock market returns, particularly in export-driven sectors like IT and pharma.
Investment Decisions: The index can help gauge the health of global economic conditions. Industries heavily reliant on global trade, like tourism and IT, are directly affected by global economic shifts. Tracking the index closely before investing in equities, especially in sectors benefiting from strong global trade is crucial for better returns.
Currency Fluctuations and Foreign Investments: Global economic uncertainties can lead to significant fluctuations in currency exchange rates, impacting the value of foreign investments and costs of imports. Stability in the global economy supports domestic trade and stability in foreign exchange markets, and also provides favourable conditions for foreign investments.
Interest Rate Sensitivity: Global economic trends can influence domestic interest rates, affecting loan costs, especially for businesses in international trade. Understanding the global economic trends and its impact on India can help predict interest rate movements, which affects the cost of external borrowings and especially for funds invested in globally exposed sectors, or sectors which are sensitive to global economic conditions.
Historical Events
Apr
2025
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Rise of Protectionism around the World: US and EU Elections
The EU and the US are India’s largest trading partners and a key source of FDI and Exports. Donald Trump’s victory in the 2024 elections and his subsequent announcement of reciprocal tariffs on trading partners reignited the concerns around protectionist policies as a means.
Oct
2023
Israel-Palestine Conflict
The current phase of the Israel-Palestine conflict erupted in Oct 2023, when Hamas, the Islamist group governing Gaza, launched a large-scale attack on Israel, killing over 1,200 people and taking more than 250 hostages. Israel responded with a declaration of war, imposing a complete siege on Gaza and launching extensive airstrikes and a ground invasion. Israel has conducted a large-scale military campaign in Gaza, aiming to dismantle Hamas.
Feb
2022
Russia-Ukraine War
The Russia-Ukraine War, with Russia’s military intervention in Ukraine on February 24, 2022, was a major geopolitical conflict that has caused widespread international concern and economic repercussions. It marks a severe intensification of the long-standing tensions between Russia and Ukraine.
Dec
2020
BREXIT
Brexit, the withdrawal of the United Kingdom (UK) from the European Union (EU), was a major geopolitical event finalised on December 31, 2020. It marked the end of a 47-year membership, leading to significant trade and political implications globally.
Mar
2020
COVID-19 Pandemic and Lockdown
The COVID-19 pandemic, a global health crisis caused by the novel coronavirus, began affecting India significantly from March 2020. Characterised by widespread infections, lockdowns, and public health emergencies, the pandemic has had profound implications on the Indian economy and society. According to the Ministry of Health and Family Welfare (MoHFW), COVID-19 caused 5,33,318 deaths as of December 19, 2023.