Fitch slashes India's growth forecast to 7% on the back of global slowdown

Fitch Ratings on Thursday trimmed India’s GDP growth forecast on the back of a global slowdown and tighter monetary policy.

The agency sees India growing at 7% in FY23 compared with 7.8% in its earlier projection. The estimates for FY24 have also been cut to 6.7% against 7.4% earlier. Further estimates for 2023-24 have also been cut to 6.7%

Crises in Europe - including war and inflation - as well as looming recession fears have caused the agency to cut global forecasts, including India's.

Current expectations show global GDP growth at 2.4% in 2022 - down by 0.5 percentage points - and at 1.7% in 2023 - down one percentage point.

"We've had something of a perfect storm for the global economy in recent months, with the gas crisis in Europe, a sharp acceleration in interest rate hikes and a deepening property slump in China," said Brian Coulton, Chief Economist at Fitch.

To add to the crisis, Europe and the United Kingdom are expected to enter a period of recession later this year, while the United States could see one in mid-2023.

In the US, growth is seen at 1.7% in 2022 and 0.5% in 2023.

"China's recovery is constrained by Covid-19 pandemic restrictions and a prolonged property slump, and we now expect growth to be 2.8% this year and to recover to 4.5% next year," the agency said in a statement.