Ratings agency Moody’s on Friday cut India’s gross domestic product growth projections for 2022 to 7% from its September estimate of 7.7%, stating that global slowdown and rise in domestic interest rates will hamper the pace of the country’s economy, PTI reported.
This is the second time that Moody’s has cut India’s growth estimates this year. The September projection of 7.7% was a downgrade from 8.8% in May.
“The weakening of the rupee and high oil prices continue to exert upward pressures on inflation, which has remained above the Reserve Bank of India’s [RBI] 4 percent -/+ 2 target inflation range for much of this year,” Moody’s said in its Global Macro Outlook 2023-’24 report, according to CNBC-TV18.
The ratings agency also noted that retail inflation in India increased to 7.5% in September after dipping below 7% in July.
To tackle inflation, the Reserve Bank of India has raised the repo rate on three occasions between May and September. During the period, the central bank has also cut its growth forecast to 7% from an earlier estimate of 7.2%.
Moody’s said it was expecting the RBI to raise the repo rate by another 50 basis points, or 0.5%, to control price rise and support exchange rate. The RBI will shift focus from inflation management…
