The International Monetary Fund had revised its India growth to 8.2 per cent, down by 0.8 base points from the previous year. The World Bank had also cut its economic growth forecast for India from 8.7 per cent to 8 per cent.
Global financial services firm UBS on Friday projected India’s economic growth at 7 per cent for the current financial year, down by 70 basis points, news agency Reuters reported. The firm cited slow global growth due to high commodity prices, weak local demand due to energy price hikes, inflation and a struggling labour market.
“We believe the pass-through of high global commodity prices to the real economy will affect households’ purchasing power and company margins, and constrain the fiscal space available for capex,” UBS economist Tanvee Gupta Jain said in a note.
On Wednesday, the International Monetary Fund had projected India’s growth to 8.2 per cent, stating that the growth had slashed by 0.8 base points from last year in the same period. The IMF had projected a global growth of 3.6 per cent due to the Ukraine war.
The IMF chief Kristalina Georgieva had hailed India’s growth rate, calling it a positive news for the world. “India is one of the economies that are growing at a high rate. Even with the small downgrade, growth is projected for this year to be 8.2 per cent,” the IMF chief had said.
The IMF forecast had come a week after the World Bank had cut its economic growth forecast for India and the entire south Asian region. The global lender had lowered its growth projection for India to 8 per cent from 8.7 per cent for the current fiscal year to March 2023, citing worse supply bottleneck and inflation due to the Ukraine war.
India meets nearly 80% of its oil needs through imports and rising crude prices push up the country’s trade and current account deficit while also hurting the rupee and fuelling imported inflation.
The Reserve Bank of India earlier this month raised its inflation forecast for the current fiscal year to 5.7%, 120 basis points above its forecast in February, while cutting its economic growth estimate to 7.2% from 7.8%.
UBS expects India’s gross domestic product growth to settle at a rate of 6% per annum beyond fiscal 2023.
(With Reuters inputs)