Global slowdown path still uncertain, India to decouple

Subject: Economy

Section: External Sector

Concept :

Recently, the RBI predicted that even though the global slowdown in 2023 may be milder than previously anticipated, the trajectory still remains unpredictable.
It was stated that India’s economy would likely decouple from the rest of the world.
Domestic consumption and investment will benefit from improved agricultural and related activity prospects, increased business and consumer confidence, and rapid credit growth.

What is decoupling ?

Generally, Decoupling occurs when the returns of an asset class that have been correlated with other assets in the past no longer move in-step according to expectations.
Decoupling may also refer to a disconnect between a country’s investment market performance and the state of its underlying economy.
Investors can view a decoupling as an opportunity if they believe that the previous pattern of correlation will return, but there is no guarantee that it will.
Many sustainable development economists also advocate for decoupling economic growth from environmental pressures—i.e., finding ways to achieve growth without increasing environmental consequences.
Relative decoupling refers to a decreasing correlation between two assets, while absolute decoupling means a zero or negative correlation.