Morgan Stanley cuts India's GDP forecast to 7.2% in FY23

"We see downside risks emanating from a weaker than expected global growth trend, supply-side-driven commodity price shock and faster than warranted tightening of financial conditions," wrote Upasana Chachra, chief India economist at Morgan Stanley in a coauthored note with Bani Gambhir.

Global growth, Morgan Stanley said, is likely to slow to 1.5 per cent YoY in quarter ending December 2022 from 4.7 per cent in the quarter ended December 2021. Slower trade growth, tighter financial conditions and changes in commodity prices are the three main reasons, it said, is why they see the pace of global growth slow going ahead.

However, support from the government's supply-side policy response back home and the reopening activity is likely to cushion the fall in economic growth, Morgan Stanley said. Another silver lining for the Indian economy, according to them, is the fall in commodity prices, which will help sustain the economic momentum.