Moody's downgrades India's growth forecast for 2022, the reason for Russia-Ukraine war

Moody’s downgrades India’s growth forecast for 2022, the reason for Russia-Ukraine war


new Delhi. Rating agency Moody’s has reduced its India’s growth forecast for the calendar year 2022 by 40 basis points to 9.1 percent. The rating agency says that the Russia-Ukraine crisis will have a negative impact on the global economy and will also affect India’s growth rate.

Last month, Moody’s raised India’s growth forecast for calendar year 2022 from 7 per cent to 9.5 per cent. But, now it has revised its growth forecast. In a statement, Moody’s has said that the increase in crude oil prices will have a special impact on India, as India is a big importer of crude oil. On the other hand, India will benefit from the increase in the price of food grains and other agricultural products because the country has a surplus stock of food grains and exports agricultural products in large quantities.

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Growth rate forecast down by 0.4 percentage point

Moody’s said in its statement- ‘The increase in fuel and fertilizer prices will put a lot of pressure on the government’s exchequer and the government will have to limit the planned capital spending. For all these reasons, we have slashed our growth forecast for our India by 0.4%. We expect India’s economy to grow at the rate of 9.1 percent this year. In the year 2023, this rate will be 5.4 percent.

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The impact of the Russia-Ukraine crisis

Russia’s invasion of Ukraine has changed the global economic background significantly. This tension has affected in three ways. First, a rise in commodity prices due to the current and expected supply constraints could lead to an alarming rise in input costs and inflation. Second, financial and business disruptions pose enormous risks to today’s integrated global economy. And third, increased security and geopolitical risks will increase economic costs. This will put pressure on the economies.

Tags: India growth, Indian economy


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