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Organisation for Economic Co-operation and Development (OECD) has retained its projection of 6.9% growth in India's GDP for the current financial year FY23. OECD expects the growth to be at 5.7% in the next fiscal. Notably, OECD's forecast for India's economic growth is lower compared to RBI's estimate of 7.2% for the overal FY23 fiscal year.
In its Economic Outlook report, OECD said, "Softer external demand is a factor in India’s projected slowdown from 8.7% annual growth in FY 2021-22 to around 7% in FY 2022-23 and around 5¾ percent in FY 2023-24, but this still represents rapid growth in the context of a weak global economy."
In terms of inflation, OECD said, " Headline inflation in the other major Asian emerging-market economies, India and Indonesia, is currently above the objective of the respective central banks, but monetary policy tightening and weaker global demand are projected to help bring inflation close to target by the end of 2023."
On global economic growth, OECD in its outlook note added, "Despite a boost in activity as COVID-19 infections drop worldwide, global growth is projected to remain subdued in the second half of 2022, before slowing further in 2023 to an annual growth of just 2.2%."
Compared to OECD forecasts from December 2021, before Russia’s aggression against Ukraine, the France-based organisation now projects global GDP to be at least $2.8 trillion lower in 2023. OECD's note said, "There are many costs to Russia’s war, but this gives some sense of the worldwide price of the war in terms of economic output."
"The world economy is paying a high price for Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine. With the impacts of the COVID-19 pandemic still lingering, the war is dragging down growth and putting additional upward pressure on prices, above all for food and energy," OECD's note added.
However, OECD also pointed out that even before The world economy is paying a high price for Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine. With the impacts of the COVID-19 pandemic still lingering, the war is dragging down growth and putting additional upward pressure on prices, above all for food and energy.
A key factor slowing global growth is the generalised tightening of monetary policy, driven by the greater-than-expected overshoot of inflation targets, as per OECD's note.
In its Economic Outlook Asia-Pacific Q3 2022 report, S&P forecasts India's economy to grow by 7.3% by end of the FY23 fiscal. S&P highlighted the causes of this downward pressure on growth are high oil prices, slowing global demand for India's exports, and high inflation. The rating agency predicts India's CPI inflation at 6.8% for the current fiscal.
In the first quarter of FY23, India's real GDP is estimated at a growth rate of 13.5%. While the gross value added (GVA) growth stood at 12.7% in Q1FY23.