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Domestic consumption may give a breather

There will be some mild recession in the US

Domestic consumption may give a breather
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Domestic consumption may give a breather 

There will be some mild recession in the US. The inflation numbers, which came about two weeks back, are promising. I think the interest rates, higher inflation, foreign currency fluctuations, and talent shortages will likely continue for a while. I think in my view, technology investments are deflationary in nature for our customer's businesses.

Whatever has been perceived in the last few months has been on the supply side rather than the demand side. But structurally, it's positive in the medium to long term. And Europe will struggle probably because of the near time risk and how they are going to manage the gas situation.

We'll have to wait for how the 2023 customers' budget shapes up over the next few weeks. All our customers are trying to catch up on the supply side issues they had in the last 12-18 months, more than the demand side.The technology layoffs are more in consumer tech. With the higher inflation, the major tech retail or consumer side of the spending will see a muted response and needs to observe the consumer spending squeeze will have on other enterprises from medium and long-cycle businesses.

If there is no major recession in the US/Europe, then that might not affect the Indian economy's performance. While India's economy is linked closely to the western economies for export and trading, domestic consumption may give a breather for economic growth in the near term.

-Karthikeyan Natarajan, Executive Director and COO, Cyient Ltd

(As told to Santosh Patnaik)

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