Despite India’s less reliance on China, analysts at the Australia and New Zealand Banking Group (ANZ) cited upside risks to inflation or trade if the epidemic stretches long.
Key quotes
We expect the direct impact from the novel coronavirus (COVID-19) outbreak on India to be limited, given the relatively small percentage of Chinese tourist arrivals to India and a small share of exports to China.
However, India’s imports from China are close to 14% and delays in shipments can have a bearing on economic activity in the former.
Sectors with large dependence on Chinese imports and those which rely on imported intermediates for consumption and exports, will likely be impacted the most.
In the event of extended disruptions, India could face upside risks to inflation or an adversely changing trade mix where looking for imports from alternative destinations could lead to higher costs.
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