Outlook #2: Projecting India’s Resilience Against Global Economic Recessions Through the G20 Presidency

Written by Bernadete Elisabeth Dening Siregar, Bimo Bagaskara Indiputera, and Michelle Calista
Research and Analysis Division FPCI Chapter UI Board of 2023
In October 2022, IMF lowered its 2023 global economic growth forecast because of the ongoing strain of the war in Ukraine, inflationary pressures and interest rate hikes by major central banks, and also the rapid spread of Covid-19. Interestingly, this year’s global recession is predicted to not have a direct impact on some countries in the Middle East, North Africa, and South Asia. India and Bangladesh are examples of countries with the strongest economic growth, benefiting from a global trend diversifying away from China (Markovitz, 2023). India offers tremendous potential and opportunity as a center for exports, manufacturing, and services . Last year, India even managed to increase its exports of products and services by 16% during the first nine months of the financial year (April—December) compared to the same perioda year before (Nageswaran, 2023). 
At the beginning of the year, the International Monetary Fund (IMF) Chief, Kristalina Georgieva, warned that the world would face a “tougher” year in 2023 than the previous one. A third of the global economy—represented by the US, EU, and China—are all slowing down at the same rate and are predicted to be hit by a recession this year (Temple-West, 2023). RA recession are significant declines in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators; it begins when the economy reaches a peak of activity and ends when the economy reaches its lowest point. (Moore, 1983). 
If the upcoming recession were to hit India, we best believe that they may already have plans and strategies to face it. India has experienced numerous recessions in the past, including in 1958, 1966, 1973, 1980, and 2021 (Rodeck, 2022). This year, India is expected to be among the world’s strongest-performing economies, and their past experiences in escaping the recession would provide them with a more stable footing. Moreover, another element that could protect the country from the economic meltdown this year is the G20 Presidency.
Hosting the G20 Presidency tends to gain positive economic impacts. India will hold the G20 Presidency this year with an aim to coordinate solutions to the key issues of global concern. This presidency is an opportunity for India to strive towards global peace by sharing the succession of the digital public infrastructure (Nageswaran, 2023).  Built upon the brief explanation above, how would the G20 presidency affect India’s ability to face the potential recession? Is India’s G20 presidency truly a determining factor in its resilience against the global recession? To answer these questions, this article addresses India’s economic situation pre-G20, the impacts of the G20 Presidency on India, and the relevance of the G20 Presidency with the country’s resilience against global recession.

India’s Economic Situation Pre-G20

India has experienced many recessions in the last 65 years, with two common causes being a weak monsoon and an energy crisis (Sharma, 2020). The country has the ability to weather an economic storm because it is less reliant on global trade and capital flows than most other countries. Also, Indian banks are surviving the recession due to a well-driven proactive fiscal policy, which has acted as a bodyguard for financial institutions (Kenge, 2020). India has escaped the direct negative impact of the Great Recession of 2008-09 (Tharoor, 2010), and is expected to avoid the next recession.
Today, India has set a goal of including the manufacturing industry in global supply chains through trade agreements by announcing the National Logistics Policy 2022. As a result, the Foreign Direct Investment equity flowing from Japan, Singapore, the United Kingdom, and the United Arab Emirates increased healthily during the fiscal year of 2022–2023 (Majumdar, 2023). This suggests that foreign investors are gaining more confidence in investing in India and that these investments are becoming more diverse. Together with China, India is making an even more significant contribution accounting for approximately half of the world’s growth in 2023 (Gourinchas, 2023).
Graph 1.1 Projection of GDP per country in 2030. (source: Bloomberg)
India is expected to become the 2nd largest economy by 2030 due to the limited health and economic impact of the Covid-19 surge, inflationary momentum from the Chinese economy, recessionary trends in major Advanced Economies, and stable domestic inflation. (Nageswaran, 2023). Furthermore, exports enabled economic recovery during the pandemic, outpacing other growth engines. Minister of Commerce and Industry, Piyush Goyal, even expected Indian exports to reach $1 trillion by 2030 (IBEF, 2022). Surpassing its own government’s prediction, the IMF even anticipated India’s economy to reach $4.7 trillion in 2024 and $5 trillion by 2026 (Kumtakar, 2022).  In line with that, the World Bank expects India to grow at a rate of 6.6% in the fiscal year 2023–2024 (Dugal, 2023). That’s why, even when the global economic outlook is predicted to be bleak, the recession may not hit India hard. Apart from that, India also has another factor that “safeguards” it from this economic meltdown: Presidency of the G20 in 2023.

India’s G20 Presidency

During the Pravasi Bharatiya Divas Conference 2023, India’s Prime Minister Narendra Modi stated that India is looking forward to hosting the G20 Presidency as it is an opportunity for India to showcase their development potential and lead the way for a more sustainable future. As an output, India and other participating countries can together devise an approach to handle previously mentioned issues.
India highlights their digital economic advancement to help realize a socioeconomic transformation. Digitalization can facilitate Micro, Small, and Medium Enterprises to use e-commerce platforms in order to gain more benefits. Not only that, India would also be discussing the importance of greening global trade (G20 Secretariat, 2023). Pressing climate concerns surrounding this issue must also be balanced by recognizing the different paces at which countries are developing their economies. If India succeeds in implementing their policies and yields good results, it could serve as a model for other countries, especially in the developing world. India’s leadership would gain more trust from the international community, hence opening new opportunities to survive the upcoming economic meltdown.
Witnessing the impacts of last year’s G20 presidency on Indonesia, this writing takes on their experience as a benchmark to forecast the impact of the G20 presidency on India. First, the G20 presidency will provide India with a platform to show its leadership skills on a global stage, especially to manage and offer innovative solutions to various economic and political issues. Second, it will allow India to shape the global economic agenda and promote its interests, ensuring influence over important decisions that will impact the global economy’s future. Third, India’s presidency would deepen its engagement with other countries and strengthen its relationships with key partners, given that India has a growing economic and strategic importance in the region and the world (Tobing et al, 2022). Finally, it will give India an opportunity to promote its vision for a more inclusive and sustainable world (G20 Secretariat, 2023). This is particularly important given India’s commitment to sustainable development and its efforts to promote social and economic inclusion, allowing them to shape the summit surrounding sustainable development. However, to achieve desired impacts, India must work their way to make the best out of this opportunity. 

Resilience Against Global Recessions

Considering the aforementioned projections, having the international community’s trust might spark further economic growth as India would be seen as a capable leader. Investors may be more convinced to invest, thus creating jobs that can progressively sustain India in recessions. Previous G20 presidencies show this pattern, where host countries attract foreign investors, thus increasing their economic activity, creating jobs, and ultimately boosting the country’s GDP. For instance, past G20 presidencies like Turkey, Argentina, China, and Japan had their domestic markets positively impacted. Compared to last year’s presidency, Indonesia managed to increase national GDP to Rp7.4 trillion due to its G20 presidency in 2022 (Pangastuti & Kristianus, 2022).
According to Indonesia’s Central Statistics Agency, Indonesia’s economy grew 5.2%-5.3% in 2022 (Kiryanto, 2022). It’s presumed that this may have an impact from Indonesia’s G20 presidency. Indonesia’s exposure through the G20 presidency helps promote local tourism, thus attracting more tourists after border restrictions were reduced. This stimulates growth for tourism areas that were previously paralyzed due to the pandemic. Gradually, it contributed to the increase of overall economic growth in Indonesia.
Graph 3.1 Projection of India’s GDP Growth until 2030 (Source: Bloomberg Economics)
Consequently, it’s not impossible that India wouldn’t bring the same effect. The South Asian giant is on the cusp of growth in the sustainable range of 6.5%-7.0% (Kiryanto, 2022). Bloomberg Economics is even more optimistic, expecting India’s economy to rise to 7.6% by 2026 and peak at around 8.5% in the early 2030s . Furthermore, collaboration between India’s G20 and Japan’s G7 presidencies represents an incredible chance for both nations to shape their future. During a bilateral meeting, India’s Minister for Environment, Forests, and Climate Change, Bhupender Yadav, stated India and Japan might consider strengthening bilateral collaboration in resource efficiency, low-carbon technology, green hydrogen, and circular economies (Luthra, 2023). Thus, India’s G20 presidency may open new opportunities for India to develop long-term international cooperation.
All in all, India’s G20 presidency is expected to benefit India by “blessing” it with the resilience against possible global recession, as the presidency will be the face of India’s increasing economic power through their independent foreign policies. India’s economy has shown positive growth and they have experienced surviving the recessions. Plus, the fact that preceding host countries have proven the positive impacts of the G20 presidency in the economic field, we may expect similar outcomes for India this year. Additionally, if their policies flourished, India may as well restore confidence not only domestically, but also in the global economy.


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