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S&P Global Ratings Cuts India GDP Growth Forecast For Two Years, Rising Inflation And Russia Ukraine Conflict Responsible

Indian Economy: Rating agency S&P Global Ratings has reduced India's...

Indian Economy: Rating agency S&P Global Ratings has reduced India’s economic growth forecast for 2022-23. The rating agency has projected India’s GDP growth rate to decline from 7.8 per cent to 7.3 per cent in 2022-23 due to the prolongation of the Russia-Ukraine War and the rise in inflation.

GDP growth will be 7.3% in 2022-23
S&P Global Ratings has said in its Global Macro Report Update to Growth Forecast that prolonged inflation is a cause for concern, due to which central banks will have to raise interest rates. This can have an impact on employment as well as output. In December 2021, S&P had projected India’s GDP to be 7.8 percent in 2022-23. For the current financial year 2022-23, the GDP has been estimated to be 7.3 percent, while in 2023-24, the GDP is estimated to be 6.5 percent. According to S&P, India’s GDP growth rate has been 8.9 percent in the financial year 2021-22.

inflation will bother
S&P Global Ratings has projected retail inflation to be 6.9 per cent in 2022-23. Which is much higher than the RBI’s estimate of 5.7 percent. Earlier, brokerage house Morgan Stanley had also said that due to rising inflation, weak consumer demand, tight financial conditions on business sentiment. There will be a bad effect as well as there will be a delay in the recovery of Capital Expenditure (CAPEX). Due to the rise in prices and rising commodity prices, inflation will increase, as well as the current account deficit can also increase to a 10-year high of 3.3 percent.

Russia-Ukraine war increased difficulties
However, Morgan Stanley’s now downgraded GDP growth rate forecast by S&P Global Ratings for the next two years is pointing to a rise in the prices of commodities and edible oil, including crude oil, due to the Russia-Ukraine war. To what extent has it affected India. Retail inflation has reached an 8-year high of 7.79 percent in April 2022, while the wholesale inflation rate has reached a nine-year high of 15.08 percent. To control inflation, RBI has increased the repo rate. But if inflation rises, debt can become more expensive, which will have an effect on demand.

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