Fitch reduces FY23 India growth forecast to 8.5%
Published On: Tuesday, March 22, 2022 | By: Team KnowMyStock
With the Omicron wave subsiding quickly, containment measures have been scaled back, setting the stage for a pick-up in GDP growth momentum in the June quarter this year, the agency said. It has revised upwards the GDP growth forecast for the current fiscal by 0.6 percentage points to 8.7 percent. "However, we have lowered our growth forecast for FY 2022-2023 to 8.5 percent (-1.8 pp) on sharply higher energy prices," Fitch said while revising up its inflation forecasts. In its Global economic Outlook-March 2022, Fitch said the post-COVID-19 pandemic recovery is being hit by a potentially huge global supply shock that will reduce growth and push up inflation.
"The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. Sanctions seem unlikely to be rescinded any time soon," the agency said.
Russia supplies around 10 per cent of the world's energy, including 17 per cent of its natural gas and 12 per cent of oil.
Observing that Indian GDP growth was very strong in the December quarter, the agency said the GDP is more than 6 per cent above its pre-pandemic level though it is still well below its implied pre-pandemic trend.
"High-frequency data indicate that the Indian economy has ridden out the Omicron wave with little damage in stark contrast with the two previous coronavirus waves in 2020 and 2021," it said.
Fitch now sees inflation strengthening further, peaking above 7 per cent in the December quarter of 2022, before gradually easing.
The agency expects inflation to remain elevated throughout the forecast horizon, at 6.1 per cent annual average in 2021 and 5 per cent in 2022.
Fitch reduces FY23 India growth forecast to 8.5%
Indian economy
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