However, when two countries experience broadly similar economic shocks, changes - if any - in the bilateral terms of trade may not significantly aid adjustments of specific economic shocks in any one country. Moreover, if factors of production, particularly capital, are highly mobile, the use of the terms of trade as an adjustment mechanism may prove to be inadequate.
In essence, India’s growth story remains as weak as it was at the time of the 2013 taper tantrum. The recent reverberations of war have, in fact, tilted the balance of risks downwards.