Fitch has also lowered its forecast for the global growth rate by 0.2% to 2.8% due to the war in Ukraine and economic sanctions on Russia.
GDP Forecast Slashed: Amidst the ongoing war between Russia and Ukraine, rating agency Fitch has reduced India’s GDP growth rate estimate for the fiscal year 2022-23 from 10.3 per cent to 8.5 per cent. This means that Fitch Ratings has reduced its earlier estimate by 1.8 percent. Higher energy prices have been cited as the reason behind this cut in the growth rate estimate. Fitch says the war in Ukraine and economic sanctions on Russia put global energy supplies at risk. Due to this, it has also reduced its earlier estimate of global growth by 0.2% to 2.8% for the year 2023.
Increase in GDP estimate for the current financial year
Even though Fitch has lowered its earlier growth forecast for 2023, it has increased its GDP growth rate for the current fiscal year from 8.1% to 8.7%. Fitch said, ” However, we have lowered our growth forecast for India for the fiscal year 2022-2023 to 8.5 per cent (-1.8 per cent reduction) due to rapidly rising energy prices.
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Moody’s has also reduced the growth rate estimate
Let us inform that a few days ago, rating agency Moody’s also reduced India’s growth forecast for the current fiscal year 2022 from 9.5% to 9.1% in view of the jump in crude oil prices. Apart from this, Moody’s has projected a growth rate of 5.4 percent for the next financial year ie 2023.
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Inflation likely to rise to 7% in Q3: Fitch
Fitch said that in the third quarter of this year, inflation in the country could rise to 7%, which is well above the level of 6% set by the Reserve Bank of India. Fitch expects inflation to remain at 6.1% of the annual average in 2021 and 5% in 2022. CPI inflation in the country has been above 6% for the last two readings, driven by rising prices of food, fuel and other household goods. In addition, higher oil prices, which have remained above $100 a barrel since Russia’s invasion of Ukraine, could further fuel inflation.
(Article: Aakriti Bhalla)
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