Fitch slashes India's FY23 GDP growth forecast to 7% on slowing global economy, rising interest cost
New Delhi (PTI): Fitch Ratings on Thursday slashed India's GDP growth projection for FY23 to 7 per cent, saying the economy is expected to slow against the backdrop of global economy, elevated inflation and high interest rate.
In June, it had forecast 7.8 per cent growth for India.
“We expect the economy to slow, given the global economic backdrop, elevated inflation and tighter monetary policy. We now expect the economy to grow 7 per cent in the financial year to end-March 2023 (FY23) from 7.8 per cent previously, with FY24 also slowing to 6.7 per cent from 7.4 per cent before,” Fitch said in its September edition of the Global Economic Outlook.
As per official GDP estimates, the Indian economy expanded 13.5 per cent in June quarter, higher than 4.10 per cent growth clocked in January-March.
The RBI expects the economy to grow 7.2 per cent in current fiscal year.
The rating agency said, inflation moderated in August as crude oil prices eased but the risk to food inflation persists, given negative seasonality towards the end of this year.
The wholesale-price based inflation softened to an 11-month low of 12.41 per cent in August, even though retail inflation inched up to 7 per cent.
Fitch said that the RBI has already front-loaded its policy rate hikes, tightening by a total of 140 basis points since the start of 2022 to 5.4 per cent in August.
“We expect the RBI to continue raising, to 5.9 per cent, before year-end. The RBI remains focused on reducing inflation, but said that its decisions would continue to be calibrated, measured and nimble and dependent on the unfolding dynamics of inflation and economic activity. We therefore expect policy rates to peak in the near future and to remain at 6 per cent throughout next year,” Fitch said.
The US-based agency said that it expects the rupee value to remain at 79 against the US dollar by the end of 2022, while the retail inflation is expected to remain at around 6.2 per cent.
It said supply shocks and inflation are hitting the world economy hard and expects the world GDP to grow by 2.4 per cent in 2022, revised down by 0.5 percentage points.
In 2023, the world GDP will grow by just 1.7 per cent, 1 percentage points lower than previous estimates.
“The eurozone and UK are now expected to enter recession later this year and the US is expected to suffer a mild recession in mid-2023,” Fitch said.
Speaking on China, it said the recovery is constrained by the pandemic restrictions and a prolonged property slump, while projecting growth to slow to 2.8 per cent this year and recover to only 4.5 per cent next year.
“We've had something of a perfect storm for the global economy in recent months, with the gas crisis in Europe, a sharp acceleration in interest rate rises, and a deepening property slump in China,” said Brian Coulton, Chief Economist, Fitch Ratings.
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PM Modi holds talks with French President Macron in Mumbai
New Delhi (PTI): Prime Minister Narendra Modi on Tuesday held wide-ranging talks with French President Emmanuel Macron to boost ties in key sectors such as trade, defence, energy and critical technologies.
Macron landed in Mumbai early this morning on a three-day visit to attend the AI Impact Summit in New Delhi and meet PM Modi.
After the talks with Modi, Macron will attend a ceremony to launch the India-France Year of Innovation.
His visit comes days after India cleared a long-pending proposal to procure 114 Rafale fighter jets under a government-to-government framework with France.
It has been billed as one of the world's biggest military procurement programmes in recent years.
It is learnt that shoring up defence cooperation and enhancing bilateral engagement in the critical technology sector are priority areas to take forward the ties.
"Welcome to India! India looks forward to your visit and to advancing our bilateral ties to new heights. I am confident that our discussions will further strengthen cooperation across sectors and contribute to global progress," Modi said on social media earlier in the day in response to a post by Macron.
