Moody’s lowers India’s GDP growth, said – inflation will eat the Indian economy

Moody’s lowers India’s GDP growth: American financial firm Moody’s has reduced India’s GDP growth forecast, expressing concern over inflation. The US firm, in its report Moody’s Investors Service on Thursday, expressed concern over rising inflation in the country, due to which the recovery in India’s economy may slow down. In this report, India’s GDP growth forecast for the year 2022 has been reduced from 9.1 percent to 8.8 percent.

Moody’s Global Macro Outlook report said that high frequency data indicates that the growth seen in December 2021 last year is continuing in the first four months of this year as well. But the increase in the price of crude oil, food and fertilizers is having a bad effect on the income and expenses of the people. At the same time, the demand recovery may slow down due to the increased interest rates by the Reserve Bank to keep inflation and power prices under control.

Moody’s lowers India’s GDP growth

Moody’s said that it has lowered India’s GDP growth forecast for 2022 from 9.1 percent to 8.8 percent, while keeping the GDP growth forecast for the year 2023 at 5.4 percent.

Moody’s lowers India’s GDP growth

The report further said that the investment cycle in India will remain strong, driven by strong credit growth and investment from the corporate sector, and increased spending on capital schemes from the government. At the same time, if the price of crude oil and the price of food items do not increase further, then the Indian economy is so strong that it will continue to grow.

Moody’s forecasts an increase in inflation. According to Moody’s, the inflation average this year is likely to remain at 6.8 per cent as against the earlier forecast of 5.4 per cent.

Even before Moody’s, many international organizations have reduced India’s growth forecast. Earlier this month, S&P Global Ratings cut its GDP growth forecast for the fiscal year 2022-23 to 7.3 per cent from 7.8 per cent. At the same time, the World Bank has reduced India’s GDP growth forecast to 8.7% in April. The IMF has also lowered its growth forecast from 9 per cent to 8.2 per cent.

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