Moody's pares India growth for 2022 to 7%

Moody's Investors Service on Friday pared India's 2022 calendar growth to 7% from 7.7% projected earlier but said the underlying growth dynamics are strong and the country is less vulnerable to weakening G-7 growth.

The weakening of the rupee and high oil prices continue to exert upward pressures on inflation, it said, forecasting another half percentage point interest rate increase by the Reserve Bank of India to anchor inflation expectations and support the exchange rate.

"The downward revision assumes higher inflation, high-interest rates, and slowing global growth will dampen economic momentum by more than we had previously expected," Moody's said in its 'Global Macro Outlook 2023-24' released on Friday.

The ratings agency expects India's growth to decelerate to 4.8% in 2023 and then rise to 6.4% in 2024. The Indian economy grew 8.5% in the 2021 calendar year, according to Moody's.

Moody's joins a host of agencies that have cut India's economic growth projections.

While the World Bank has revised its growth estimate for India by 100 basis points to 6.5%, the IMF has trimmed it to 6.8% from 7.4%.

The Asian Development Bank cut its projection to 7%, from 7.5% earlier.

Global growth

It sees real GDP growth of the G-20 economies to decelerate to 1.3% in 2023 from the 2.1% estimated earlier.

Global growth will slow in 2023 and remain sluggish in 2024.