S&P Global Ratings, the world’s leading independent credit rating agency, has retained its forecast for India’s economic growth in the current fiscal year 2022–2023 (FY23) at 7.3%, stating a low impact of the global slowdown on its domestically-driven economy.
- It had earlier forecasted 7.8% growth for 2022–2023; however, it decreased that to 7.3% in its Economic Outlook Asia–Pacific Q3 2022 report, citing inflationary pressures.
- It further forecasts 6.5% real Gross Domestic Product (GDP) growth in 2023–2024, 6.7% in 2024–2025, and 6.9% in 2025–2026.
i.S&P Global Ratings estimates that inflation will remain over the Reserve Bank of India’s (RBI) upper tolerance level of 6% until the end of 2022.
ii.According to the rating agency, India’s headline Consumer Price Index (CPI) inflation will be 6.8% in FY23.
- Due to increasing food prices, India’s CPI inflation (retail inflation) increased to 7% in August 2022 from 6.71% in July 2022.
- The Wholesale Price Index (WPI) inflation remained at 12.41% in August 2022.
iii.India’s real GDP is estimated to reach Rs. 36.85 lakh crore in first quarter (Q1) of FY23, up from Rs. 32.46 lakh crore in Q1 FY21–22, representing a 13.5% growth. Gross Value Added (GVA) rose by 12.7% in Q1FY23.
OECD Economic Outlook: Retains India’s GDP Growth Forecast of 6.9% For FY23, Lower Than RBI’s Target
The Organisation for Economic Co-operation and Development (OECD) retained its forecast of 6.9% GDP growth for India for the current fiscal year FY23 in its “OECD Economic Outlook-Interim Report September 2022.”
- The OECD forecasts growth of 5.7% for FY24.
- It is to be noted that the OECD forecast for India’s economic growth is lower than the RBI’s estimate of 7.2% for the entire fiscal year FY23.
According to the report, global growth will remain subdued in the second half of 2022 before declining further in 2023 to just 2.2% annual growth.
Recent Growth Projections of Indian Economy by Other Agencies/Organizations
i.The RBI forecasts 7.2% growth in the Indian economy in FY23. It grew by 13.5% in the April-June quarter of 2022, falling short of the RBI’s 16.2% estimate.
ii.Fitch Ratings cut its growth forecast for FY23 to 7%, down from 7.8% previously.
iii.The Asian Development Bank (ADB) has lowered its forecast to 7% from 7.5%.
iv.India Ratings and Research (Ind-Ra) lowered its projections to 6.9% from 7%.
v.Soumya Kanti Ghosh, the Chief Economist at the State Bank of India (SBI), has reduced India’s full-year GDP growth forecast to 6.8% for FY23 from 7.5%.
vi.Citigroup Inc. drastically reduced its forecast for India’s growth for FY23 to 6.7% from 8%, and Goldman Sachs Group Inc. decreased it to 7% from 7.2%.
Moody’s Analytics: Global Economy to Grow at 2.7% In 2022, 2.3% In 2023
Moody’s Analytics, a financial services firm, has reduced its Global Real GDP forecast to 2.7% in 2022 from 4.2% (January 2022), in its report titled “Global Outlook: Global Economy on Edge”, citing increased stagflation risks globally.
- Global growth is projected to decline to 2.3% in 2023 from the earlier forecast of 3.6%.
i.The report claims that stagflation risks have escalated globally, although it would take months before getting materialized.
- Stagflation is characterised by relatively high unemployment and slow economic growth, often known as economic stagnation, which is also accompanied by an increase in prices (i.e., inflation).
ii.According to the report, the performance of the world’s major economies—the United States, China, Japan, India, and the five largest economies in Western Europe—Germany, Russia, France, the United Kingdom (UK), and Italy—remains uneven.
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Gurugram (Haryana)-based rating agency ICRA Limited has projected India’s GDP growth to increase a four-quarter high 13% in Q1 (April-June) FY23 due to low base of Covid 2.0 and robust recovery in contact-intensive services. The GDP projection was 4.1% in Q4 FY22.
About Organisation for Economic Co-operation and Development (OECD):
Secretary General – Mathias Cormann
Establishment – 1960
Headquarters – Paris, France