Global credit rating agency Moody’s Investors Service (MIS) increased India’s economic growth projection for 2023 to 5.5% from 4.8% in November 2022 in its “Global Macro Outlook 2023-24 (February 2023 Update)”.
- This upward revision is made in light of a strong increase in capital expenditure (capex) in the Budget 2023–24 and a resilient economic momentum.
- India’s economic growth is projected to be 6.5% in 2024.
However, it reduced India’s growth projection for 2022 from the 7% it had predicted in November 2022 to 6.8%.
Key Points:
i.In India, the upward revisions include a significant increase in capex budget allocation to Rs. 10 trillion (3.3% of Gross Domestic Product [GDP]) for fiscal year 2023-24 (FY24), up from Rs. 7.5 trillion for the fiscal year ending in March 2023 (FY23).
- Moody’s highlighted this while projecting a 70 basis point (bps) increase in 2023 real GDP growth at 5.5% and 6.5% growth in 2024.
ii.India’s growth forecast has been “meaningfully raised” due to strong data in the second half of 2022 causing huge carryover effects for 2023.
iii.India is one of the major emerging market countries where the economic momentum has proven to be more resilient than anticipated to the tightening of the global and domestic financial environment in 2022.
Global Economic Growth Will Continue to Slow in 2023
According to Moody’s, economic activity and employment will be adversely affected by cumulative monetary policy tightening in most major economies, which will slow down global growth in 2023.
- It projects that the G20 (Group of Twenty) would have 2% global economic growth in 2023, down from 2.7% in 2022, before rising to 2.4% in 2024.
Key Points:
i.According to the report, inflation will continue to moderate, but a sustained decline to central bank targets is not ensured.
ii.During a significant period of 2023 and 2024, inflation in advanced economies would likely remain above central bank targets.
Recent Related News:
The International Monetary Fund (IMF) in its World Economic Outlook- January 2023 update has projected India’s growth to decline from 6.8% in 2022 to 6.1% in 2023 before picking up to 6.8% in 2024.
About Moody’s Investors Service (MIS):
Moody’s Investors Service (MIS) is a leading provider of credit ratings, research, and risk analysis.
President – Michael West
Headquarters – New York, United States (US)
