Moody's cuts India's GDP growth projection to 7 pc for 2022

Rating agency Moody's on Friday slashed India's GDP growth projections for 2022 to 7 per cent from 7.7 per cent earlier as the global slowdown and rising domestic interest rates will dampen economic momentum. This is the second time that Moody's Investors Service has cut India's growth estimates. In September, it had cut projections for the current year to 7.7 per cent from 8.8 per cent estimated in May. "For India, the 2022 real GDP growth projections have been lowered to 7 per cent from 7.7 per cent. The downward revision assumes higher inflation, high-interest rates and slowing global growth will dampen economic momentum by more than we had previously expected," the agency said in its Global Macro Outlook 2023-24.

Moody’s expects growth to decelerate to 4.8 per cent in 2023 and then to rise to around 6.4 per cent in 2024.  It said the global economy is on the verge of a downturn amid extraordinarily high levels of uncertainty amid persistent inflation, monetary policy tightening, fiscal challenges, geopolitical shifts and financial market volatility.  Global growth will slow in 2023 and remain sluggish in 2024. Still, a period of relative stability could emerge by 2024 if governments and central banks manage to navigate their economies through the current challenges, Moody’s added.

While the World Bank has revised down its growth estimate for India by 100 basis points to 6.5 per cent, IMF has trimmed it to 6.8 per cent from 7.4 per cent. The Asian Development Bank too has cut its projection to 7 per cent, from 7.5 per cent earlier. S&P Global Ratings revised down its growth forecast to 7.3 per cent for current fiscal year from 8.7 per cent. The RBI expects economic growth at 7 per cent for this fiscal year.