Moody’s has lowered India’s economic growth projection for 2022 to 7 percent from 7.7 percent earlier, citing global slowdown and high interest rates in the country.
Moody’s Investors Service has cut India’s growth estimates for the second time in a row. Earlier in September, it had slashed 2022 projections to 7.7 percent from 8.8 percent estimated in May.
“For India, the 2022 real GDP growth projections have been lowered to 7 percent from 7.7 percent. The downward revision assumes higher inflation, high interest rates and slowing global growth will dampen economic momentum by more than we had previously expected,” said the Global Macro Outlook 2023-24.
The agency has forecast growth to decelerate to 4.8 percent in 2023 and then to rise to 6.4 percent in 2024.
The Indian economy grew 8.5 percent in 2021 calender year, according to Moody’s. As per official GDP estimates, the economy expanded 13.5 percent in April-June 2022-23, higher than 4.10 percent growth clocked in January-March.
GDP figures for September quarter would be released at the end of this month.
Moody’s said the weakening of the rupee and high oil prices continue to exert upward pressures on inflation, which has remained above the RBI’s tolerance level of 6 percent for much of this year.
Retail inflation increased to 7.41 percent in September, while wholesale inflation remained in double digit for the 18th straight month at 10.7 percent.
The RBI has hiked interest rates by 190 basis points between May and September to 5.90 percent to contain inflation.
Moody’s expects the RBI to raise the repo rate by another 50 basis points or so as part of its objective to tame inflation and support the exchange rate.
