Moody’s Cuts India’s GDP Forecast For 2022: Moody’s Investors Service on Friday slashed India’s GDP growth projections for 2022 to 7 per cent from 7.7 per cent earlier. It said the global slowdown and rising domestic interest rates will dampen economic momentum. This is the second time that Moody’s Investors Service has cut India’s growth estimates. In September, it had cut projections for the current year to 7.7 per cent from 8.8 per cent estimated in May.
“For India, the 2022 real GDP growth projections have been lowered to 7 per cent from 7.7 per cent. The downward revision assumes higher inflation, high-interest rates and slowing global growth will dampen economic momentum by more than we had previously expected,” the agency said in its Global Macro Outlook 2023-24.
Moody’s expects growth to decelerate to 4.8 per cent in 2023 and then to rise to around 6.4 per cent in 2024. It said the global economy is on the verge of a downturn amid extraordinarily high levels of uncertainty amid persistent inflation, monetary policy tightening, fiscal challenges, geopolitical shifts and financial market volatility. Global growth will slow in 2023 and remain sluggish in 2024. Still, a period of relative stability could emerge by 2024 if governments and central banks manage to navigate their economies through the current challenges, Moody’s added.
At the end of September 2022, the Reserve Bank of India (RBI) during the monetary policy review also revised downwards India’s GDP forecast for the financial year 2022-23 to 7 per cent, from 7.2 per cent earlier. India’s GDP grew by 13.5 per cent in the June 2022 quarter.
While presenting the latest bi-monthly monetary policy statement, RBI Governor Shaktikanta Das said, “The headwinds from extended geopolitical tensions, tightening global financial conditions and possible decline in the external component of aggregate demand can pose downside risks to growth.”
He added that taking these factors into consideration, real GDP growth for 2022-23 is projected at 7 per cent with that for the second quarter at 6.3 per cent; third quarter at 4.6 per cent; and fourth quarter at 4.6 per cent, with risks broadly balanced. “The growth for Q1:2023-24 is projected at 7.2 per cent.”
Das, however, had said that despite the unsettling global environment, the Indian economy continues to be resilient and there is a macroeconomic stability. The financial system remains intact, with improved performance parameters. The country has withstood the shocks from COVID-19 and the conflict in Ukraine.
(With Inputs From PTI)
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