New Delhi: Moody’s on Thursday slashed India’s growth forecast for the current year to 9.1 per cent from 9.5 per cent, saying a higher fuel and fertilizer import bill could limit the government’s capital expenditure. In its ‘Global Macro Outlook 2022-23 (March 2022 update): Economic growth will suffer consequences from Russia’s invasion of Ukraine’ report, the rating agency said that Russia’s invasion of Ukraine affected the global economic background through three main channels. – a dent in sentiment due to rising commodity prices, risks from financial and business disruption to the global economy and heightened geopolitical risks.
It said Russia is the only G-20 economy to contract this year and predicted its economy would shrink 7 percent in 2022 and 3 percent in 2023, down from previously projected growth of 2 percent and 1.5 percent, respectively. invasion of Ukraine. With regard to India, it said the country is particularly sensitive to high oil prices, given that it is a major importer of crude. Since India is a surplus producer of cereals, agricultural exports will benefit in the short run from higher prevailing prices.
“Higher fuel and potential fertilizer costs will weigh on government finances down the road, potentially limiting planned capital expenditure.” For all these reasons, we have lowered our 2022 growth projections for India by 0.4 percentage points We now expect the economy to grow by 9.1 percent this year, Moody’s Investors Service said.
It has forecast a growth of 5.4 percent for 2023. Year-end inflation for India is projected at 6.6 per cent in 2022.
The Indian economy grew by 8.2 per cent in the 2021 calendar year, after a 6.7 per cent contraction in 2020 – the year of the COVID outbreak. With regard to the global economy, Moody’s said the possibility of new COVID waves, monetary policy missteps and social risks associated with high inflation could dampen the growth outlook.
Moody’s forecasts China’s economy to grow by 5.2 percent in 2022 and 5.1 percent in 2023.
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