BANKING AND ECONOMY
For the financial year FY23, India’s GDP growth forecast lowered to 7.3% from the previous forecast of 7.8%. It was estimated by the rating agency, S&P Global Ratings.
The GDP forecast declined because of the rising inflationary pressure and longer-than-expected Russia-Ukraine war. The other reasons cited as weaker first-quarter numbers in many countries, faster monetary policy normalization, and slower Chinese growth. The faster monetary policy normalization will slow demand more than previously expected.
The agency estimated that the inflation forecast for India increased by 90 basis points (bps) to 6.3% for the current fiscal year. The fuel and food inflation would remain high even if core inflation declines, which leads to stagflation.
The rating agency also forecasted the growth of the USA and China for the financial year 2022 at 2.4% and 4.2% respectively.
Earlier, the World Economic Situation and Prospects report estimated India’s GDP growth to be 6.4% for the current fiscal year which is down from the previous estimation of 6.7%. The higher inflationary pressures and uneven recovery of the labor market will curb private consumption and investment. The report was released by the United Nations (UN).
Earlier, the Central Bank of the country, the Reserve Bank of India (RBI) also downgraded the country’s growth projection to 7.2% for the current fiscal and 6.5% for the next fiscal year.