Moody’s Growth Outlook: After Russia’s ongoing attack against Ukraine, once again there is an atmosphere of uncertainty in the world.
Due to Russia’s “special military operation”, stock markets around the world, including India, are seeing a decline.
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Crude oil has crossed $100 per barrel, which is bad news for the world as well as India.
Meanwhile, international rating agency Moody’s Investors Service has cut India’s growth forecast for the current year from 9.5 per cent to 9.1 per cent. It added that the costly fuel and fertilizer import bill could limit the government’s capital expenditure.
In its Global Macro Outlook 2022-23 (March 2022 update), Russia’s invasion of Ukraine will hurt economic growth. The rating agency said that India’s economic growth rate is likely to be 5.4 percent in 2023.
It further said that India is particularly vulnerable to high oil prices as it is a major importer of crude. India is a surplus producer of cereals, so agricultural exports will benefit in the short run from higher prevailing prices.
“Higher fuel and potential fertilizer costs will burden the exchequer in the future, potentially limiting planned capital expenditures,” Moody’s said.
For all these reasons, we have reduced our 2022 growth projections for India by 0.4 per cent. Now we expect the economy to grow at the rate of 9.1 percent this year.
It said the forecast revision is also a factor in somewhat stronger underlying momentum, which the agency had not accounted for earlier, PTI reported.
(with agency input)