Global slowdown: Moody’s slash India’s GDP growth to 7% in 2022
Virendra Pandit
New Delhi: In September, Moody’s Investors Service, while retaining India’s sovereign rating at Baa3 with a stable outlook, said that rising challenges to the global economy—the impact of the Russia-Ukraine war, higher inflation, and tightening financial conditions because of the policy tightening—is unlikely to derail the country’s ongoing post-pandemic recovery in 2022 and 2023.
It had also cut projections for the current financial year to 7.7 percent, down from the 8.8 percent estimated in May.
As the global economy slips into a recession amid uncertainties, Moody’s, on Friday, slashed India’s GDP growth projections for 2022 to 7 percent as the global slowdown and rising domestic interest rates will dampen economic momentum. This is the second time the agency cut India’s growth estimates.
“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,” the agency said in its Global Macro Outlook 2023-24.
Moody’s expects growth to decelerate to 4.8 percent in 2023 and then to rise to around 6.4 percent 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 navigate their economies through the current challenges, Moody’s added.
This projection has come when India has been among the best-managed economies showing post-pandemic resilience and rebound. In the last couple of months of festival season, the Indian markets were upbeat with purchases and stock markets showed promise for the future.
The latest Moody’s estimates showed that while many leading economies, including the US, UK, China, and European nations, could face rough weather next year, India’s economy would relatively be better off.
