Moody’s Investors Service reduced India’s Gross Domestic Product (GDP) growth forecast for 2022 to 7% from 7.7% in September 2022 in its Global Macro Outlook 2023-24.
- This can be attributed to tighter monetary policy, rising inflation, uneven distribution of monsoon and slower global economy.
Moody’s has also lowered its growth projection for 2023 from 5.2% to 4.8%, with a recovery to 6.4% anticipated in 2024.
i.According to Moody’s, the Reserve Bank of India (RBI) would raise the repo rate by another 50 basis points in order to stabilize inflation expectations and support rupee exchange rate.
ii.The RBI increased the repo rate by a cumulative of 190 basis points (bps) between May – September 2022, reaching a 3-year high of 5.9% in an effort to minimize inflation risk.
iii.Annual headline Consumer Price Index (CPI) inflation increased from below 7.0% in July 2022 to 7.5% in September 2022.
iv.However, the Wholesale Price Index (WPI) inflation rate has decreased from a peak of 16.6% in May 2022 to 10.7% in September 2022.
Growth Forecasts by Other Agencies
- The World Bank (WB) has reduced India’s growth forecast by 100 basis points to 6.5%.
- The International Monetary Fund (IMF) revised its growth forecast downward, from 7.4% to 6.8%.
- The Asian Development Bank (ADB) has also decreased its forecast from 7.5% to 7.0%.
- For the current fiscal year 2022–23 (FY23), S&P Global Ratings revised down its growth projection from 8.7% to 7.3%.
- The RBI expects 7% economic growth in FY23.
UBS India Report: India’s FY24 GDP Growth to Slow Down to 5.5%
According to the UBS India Report, GDP growth in India would drop to 5.5% in FY24, down from 6.9% in the current fiscal year 2022-23 (FY23).
- India’s real GDP growth is expected to slip down from 6.9% Year-over-year (YOY) in FY23 to 5.5% YoY in FY24 before levelling off at the long-term average of 6% in FY25.
Recent Related News:
In October 2022, the World Bank (WB) in its latest South Asia Economic Focus titled ‘Coping with Shocks: Migration and the Road to Resilience’ has declined the real Gross Domestic Product (GDP) growth forecast for India for 2022-23 (FY23) to 6.5%, from an earlier estimate of 7.5%.
About Reserve Bank of India (RBI):
Governor– Shaktikanta Das
Deputy Governors– Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Headquarters– Mumbai, Maharashtra
Establishment– 1st April 1935