Moody’s cut India’s GDP forecast for 2022 to 7% from 7.7%. “We expect growth to slow to 4.8% in 2023 and then pick up to around 6.4% in 2024,” Moody’s said. The downward revisions to growth forecasts result from the geopolitical impact of the war between Ukraine and Russia, the global tightening of countries’ monetary policies, as well as extremely high and persistent inflation rates. Not just India, but the world is set to face an economic downturn, according to Moody’s.
Growth across the world will remain slow, downward forecasts are not limited to India. “We have revised down our forecast for global economic growth. We expect real GDP growth for G-20 economies to slow to 1.3% in 2023, significantly lower than our previous estimate of 2.1% and down from an estimated growth of 2.5 % this year,” Moody’s statement read.
Due to a range of factors, the slow pace of growth will continue through 2024. “Yet a period of relative stability could emerge by 2024 if governments and central banks manage to steer their economies through current challenges,” the statement added.
The forecasts of America, China, Japan and many other European countries have been revised downwards, among others. G-20 developing countries have mixed forecasts, especially since their markets are largely dependent on their economic structure. However, India and Brazil are less likely to face severe economic downturns. “Large, domestically-focused emerging market economies, such as India and Brazil, will be less vulnerable to weaker G-7 growth than export-focused countries,” Moody’s added.
The update comes a month after the IMF (International Monetary Fund) cut India’s GDP forecast for FY23 to 6.8%, down from its previous estimate of 7.4%. The IMF estimates that India’s GDP growth will slow further to 6.1% in FY24. The World Bank has also cut its FY23 projection of India’s GDP from its previous estimate. from 7.5% to 6.5%. However, despite reductions in India’s GDP projections, India remains one of the world’s fastest growing economies.