World Bank cuts growth forecast to 7.5%
NEW DELHI: The World Bank on Tuesday cut India’s GDP growth forecast for 2022-23 to 7.5% from the earlier estimate of 8%, citing the impact of high inflation, supply chain disruptions and geopolitical tensions.
“Growth will also be supported by fixed investment undertaken by the private sector and by the government, which has introduced incentives and reforms to improve the business climate. This forecast reflects a 1.2-percentage-point downward revision of growth from the January projection. Growth is expected to slow further to 7.1% in FY24 back towards its longer-run potential,” the World Bank said in its latest report.
In April, the World Bank had cut India’s growth estimate to 8% for FY23 from the earlier 8.7% due to the impact of supply chain disruptions and soaring inflation. India’s economy has staged a sharp recovery from the impact of lockdowns that were imposed to prevent the spread of Covid but the war in Ukraine has dealt another blow, resulting in surging price pressures, which have prompted the RBI to raise interest rates sharply. The Indian economy grew 8.7% in FY22 after contracting 6.6% in the previous fiscal year.
The RBI has also lowered its GDP growth forecast to 7.2% for 2022-23 from the earlier estimate of 7.8% due to the impact of geopolitical tensions and the impact on prices. The central bank will unveil its monetary policy statement on Wednesday and there are expectations that it will again raise interest rates to tame inflation.
