US-led “Most Disruptive” Hormuz blockade could jolt global economy, India to face inflation risks: PHDCCI

NEW DELHI: A complete blockade of the Strait of Hormuz would be the “most disruptive geopolitical shock” to the global economy, with immediate implications for India through surging energy prices, rising inflation and supply chain disruptions, Mr. Ranjeet Mehta, CEO and Secretary General of PHDCCI, told ANI on Thursday.

“A blockade of the Strait of Hormuz will be the most disruptive geopolitical shock the world economy can ever have… this narrow passage handles around 20 to 30 per cent of the global energy supply,” he said, warning that any disruption would sharply push up crude prices and trigger economy-wide cost pressures.

He said India would feel the impact almost immediately as higher energy prices would translate into increased logistics costs, disruptions in transport and supply chains, and a broader inflationary spiral.

“With energy prices, all other prices are connected; logistics costs will go up, and supply chains will be disrupted,” he noted, adding that the Reserve Bank of India (RBI) would have “very little room” to manage inflation under such circumstances.

On the current inflation trajectory, Mr. Mehta said price levels remain under control for now. “As of now, there is not much of a problem… inflation is within manageable limits, it is below 4 per cent,” he said, while cautioning that prolonged tensions in West Asia or any escalation around Hormuz could have “very serious implications for the world economy,” with India unlikely to remain insulated.

Source: ANI