: Moody’s slashes India’s economic growth forecast to 7.7% for 2022 #finance #StockMarketNEWS #Business Services and manufacturing sectors have seen robust upswings New Delhi: Moody’s Investors

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Moody’s slashes India’s economic growth forecast to 7.7% for 2022 #finance #StockMarketNEWS #Business
Services and manufacturing sectors have seen robust upswings

New Delhi: Moody’s Investors Service on Thursday slashed India’s economic growth projection for 2022 to 7. 7%, citing dampening of economic momentum in coming quarters on rising interest rates, uneven monsoon, and slowing global growth.

This is a sharp 1. 1 percentage points cut from the growth projection of 8. 8% for current year made in May by Moody’s.

The Indian economy grew 8. 3% in 2021 after a 6. 7% contraction in 2020, the year when the pandemic struck the country.

In its update to Global Macro Outlook 2022-23, Moody’s said India’s central bank is likely to remain hawkish this year and maintain a reasonably tight policy stance in 2023 to prevent domestic inflationary pressures from building further.

“Our expectation that India’s real GDP growth will slow from 8. 3% in 2021 to 7. 7% in 2022 and to decelerate further to 5. 2% in 2023 assumes that rising interest rates, uneven distribution of monsoons, and slowing global growth will dampen economic momentum on a sequential basis, “ Moody’s said.

Moody’s projections came a day after India released its GDP estimates for June quarter as per which the economy expanded 13. 5% in the three-month period.

This was higher than 4. 1% GDP growth clocked in January-March.

Moody’s said high-frequency data for the Indian economy shows strong and broad-based underlying momentum in the first four months (April-July) of fiscal year 2022-23.

As per official GDP estimates, the economy expanded 13. 5% in April-June 2022-23, higher than 4. 10% growth clocked in previous March quarter.

Moody’s said services and manufacturing sectors have seen robust upswings in the economic activity, according to hard and survey data, such as PMI, capacity utilization, mobility, tax filing and collection, business earnings and credit indicators.

However, inflation remains a challenge with the RBI having to balance growth and inflation, while also containing the impact of imported inflation from the year-to-date depreciation of the Indian rupee against the US dollar of around 7%.

India’s economic growth before the COVID-19 shock had materially slowed because of the impact of corporate-sector deleveraging on business investment.

“With the deleveraging complete, corporate-sector investment is showing early signs of a pick-up, which could provide support to a continued business cycle expansion through several quarters, supported by investment-friendly government policies and the rapid digitization of the economy,�? Moody’s added.

With regard to inflation, Moody’s expects inflationary pressures to weaken in July-December period of current year and further in 2023.