It however revised downwards India’s growth estimate for 2022 to 6.8 per cent from 7 per cent pegged in November last year.
In its February update to Global Macro Outlook 2023-24, Moody’s raised the baseline 2023 real growth projections “meaningfully” for several G20 economies, including the US, Canada, the Euro area, India, Russia, Mexico, and Turkiye, accounting for a stronger end to 2022.
“In the case of India, the upward revisions additionally incorporate the sharp increase in capital expenditure budget allocation to Rs 10 trillion (3.3 per cent of GDP) for fiscal year 2023-24, up from Rs 7.5 trillion for the fiscal year ending in March 2023,” Moody’s said while projecting a 70 basis points increase in 2023 real GDP growth at 5.5 per cent and 2024 growth at 6.5 per cent.
It said India’s growth projection has been “meaningfully raised” as strong data in the second half of 2022 created large carry-over effects for 2023.
Moody’s said economic momentum in a number of large emerging market countries, including India, has proved more resilient to last year’s tightening in the global and domestic financial environment than it had anticipated.
An eventual let-up in monetary policy tightening in the US will help stabilise, if not improve, capital flows to emerging market countries. However, until inflation in advanced economies is firmly in check, emerging markets will remain vulnerable to bouts of heightened financial market volatility, it said. The Indian economy in the third quarter of the ongoing fiscal saw its growth rate moderating to 4.4% as weaker global demand and high inflation weighed on the world’s fifth-largest economy.
Quarterly data showed GDP growth down from 6.3 percent in the September quarter after consumption weakened following India’s festive season.
But the National Statistics Office’s full-year forecast for the year ending March 31 remained unchanged at 7.0 percent, ranking India’s economic outlook above every other major country.
“GDP at 4.4 percent is very much on the expected lines,” said Nish Bhatt, founder and CEO at investment consulting firm Millwood Kane International.
“The growth rate has slowed down due to higher inflation and lower consumption,” he added.
India bounced back strongly from the coronavirus pandemic but is still grappling with the same headwinds buffeting the global economy.
(With agency inputs)