Moody’s in its Global Macro Outlook Report on Thursday cut-downed the GDP forecast for India for the calendar year 2022 by 30 basis point from 9.1 percent to 8.8 percent.
This Report has came-out when the Reserve Bank of India hiked the repo rate for 40 basis point to 4.40 percent in its May monetary policy to keep the inflation low. However, the government has also taken steps to pacify the inflation and cut the excise duty on petrol and diesel and the excise duty on sunflower and palm oil and banned the sugar and wheat export.
Investor service agency said that “We have lowered our calendar-year 2022 growth forecast for India to 8.8% from our March forecast of 9.1%, while maintaining our 2024 growth forecasts at 5.4.”
Moody’s expects inflation in India to average 6.8 percent in 2022 and 5.2 percent in 2024 and Reserve Bank of India Could also cut its growth forecast from its current stance at 7.2 per cent.
In india, retail inflation is now at 7.79 percent, higher in 8 years. Economist has observed that the CPI based inflation will remain above RBI lines for a whole year and it will affect rural areas than urban regions.
Meanwhile, Moody’s also lowered Global GDP projection for year 2022-23, as supply distribution is going on cause of Russia-Ukraine war and Covid-19 situation in China. “Advanced economies will expand 2.6% in 2022 and emerging market countries will grow 3.8%, down from March forecasts of 3.2% and 4.2%, respectively, Moody’s Investors Service stated in a report today.”
Rating agency expects that the Chinese economy to grow 4.5 percent in 2022 and 5.3 percent in 2024.
Agency said that the current scenario, in which the growing prices of food items and fertilizers and growing CPI based inflation and the interest rate hike to curb the inflation “will slow the demand recovery’s momentum”.
On the current geopolitical scenario, Moody’s said that if geopolitical decisions are taken from an economic perspective, policy choices will become less predictable and geopolitical and economy uncertainties will increase.
