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ADB lowers India growth forecast amid weak global demand, high inflation

21 Sep 2022 Evaluate

The Asian Development Bank (ADB) in an update of its flagship economic publication, Asian Development Outlook (ADO) has lowered its 2022 economic growth outlook for India, amid sluggish global demand and tightening of monetary policy to manage inflationary pressures from elevated prices for oil and other commodities. ADB forecasts growth of 7.0% for fiscal year (FY) 2022 (ending March 31, 2023). That compares with a projection of 7.5% in April. The growth outlook for 2023 is also revised down to 7.2% from 8.0%.

Besides, it stated Inflation is forecast to remain elevated over the next 2 years, averaging 6.7% in FY2022 before moderating to 5.8% in FY2023. High inflation has led India’s central bank, the Reserve Bank of India, to increase policy rates, thereby raising the cost of borrowing. Inflationary pressures will crimp private consumption. However, subsidized fertilizer and gas, free food distribution, and excise duty cuts will help offset some of the impacts of high inflation on consumers.

Moreover, it said the services sector is expected to remain buoyant due to the lifting of COVID-19 restrictions. However, the manufacturing sector is expected to grow slower because of rising input costs. Agriculture value-added is likely to be marginally lower, as the sown area has declined, and the monsoon remains uneven. A slowdown in global growth will result in sluggish exports, while the value of imports is likely to increase.


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