Fitch Cuts India FY23 GDP Growth Forecast To 7%

Fitch has lowered India's economic growth forecast for fiscal 2022-23 as measured by gross domestic product (GDP) to 7 per cent from its June 2022 estimate of 7.8 per cent. It now expects the GDP to slow further to 6.7 per cent in FY24 as compared to its earlier forecast of 7.4 per cent.

"The (Indian) economy recovered in 2Q22 with growth of 13.5 per cent year-on-year (y-o-y), but this was below our June expectation of an increase of 18.5 per cent y-o-y. Seasonally adjusted estimates show a 3.3 per cent quarter-on-quarter (q-o-q) decline in 2Q22 though this seems to be at odds with high-frequency indicators. We expect the economy to slow given the global economic backdrop, elevated inflation and tighter monetary policy," Fitch said.

If interest rates continue to rise, analysts and economists tracking the economy fear that there could be further downside risks to inflation.

Earlier, Moody's Investors Service cut India's GDP (Gross Domestic Product) growth forecast for 2022 to 7.7 per cent. It said that rising interest rates, uneven monsoon, and slowing global growth will affect the economic growth on a sequential basis.

The government is expecting the economy to grow at 7-7.5 per cent in 2022-23, in line with its projections made at the beginning of this financial year. India registered a growth of 8.7 per cent in 2021-22. "We remain on course to meet the 7.4 per cent. We expect to achieve. This does not really reflect on what is expected to be annual real GDP growth. So, 7-7.5 per cent in that range. 7.4 per cent is what the IMF has predicted," Finance Secretary T V Somanathan said earlier this month.