moody’s spoiled India’s ‘mood’, made a huge cut in the forecast of economic growth
Moody’s Rating: Moody’s Investors Service, the world’s leading credit rating agency, has cut India’s growth projections. India on Thursday lowered its economic growth forecast for 2022 to 7.7 per cent and said rising interest rates, uneven monsoon and slow global growth will slow economic momentum on a gradual basis. Earlier in May, Moody’s had projected India’s economic growth rate to be 8.8 percent for 2022.
The economy grew at the rate of 8.3 percent in 2021, before it was 6.7 percent in 2020 due to the corona virus. Updating the macro-global outlook for 2022-23, Moody’s said India’s central bank may maintain an aggressive stance this year and take a tougher policy stance to prevent aggravating domestic inflationary pressures.
Moody’s said, “We expect India’s real GDP growth to decline from 8.3 per cent in 2021 to 7.7 per cent in 2022 and economic momentum due to interest rate hikes, uneven monsoon and slowing global growth momentum.” On a sequential basis, it can be further reduced to 5.2 per cent in 2023.
Moody’s said that looking at the survey data such as PMI, capacity utilization, mobility, tax filing and collection, income and credit indicators of businesses, it can be said that economic activity in the services and manufacturing sectors has picked up. It said inflation remains a challenge for the central bank RBI and it has to strike a balance between growth and inflation and also check the effect of inflation on imported goods.
On inflation, Moody’s estimated that its pressure may ease in the period from July to December in the current financial year. Moody’s said, “The central bank may maintain an aggressive stance this year and adopt a tough policy stance in 2023 so that domestic inflation pressures do not increase further.”
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