Moody’s raises growth forecast to 8.4%

Moody’s Investors Service upgraded its financial year 2022-2023 (FY23) growth forecast for the Indian economy to 8.4 % from the earlier estimated 7.9 % as the country moves to normalcy, post the removal Covid-19 restrictions. However, it cautioned that high oil prices and supply distortions could drag the growth down.

Fitch Ratings, on the other hand, maintained its earlier projection of 10.3 % growth in FY23 compared to 8.4 % estimated for FY22. Moody’s has estimated the Indian economy to grow at 9.3 % in FY22, official data for which will be released. “Fiscal push for infrastructure spending could help consolidate India’s economic recovery. We have raised our 2022 calendar year (CY22) growth forecasts for India to 9.5% from 7%, and maintained our forecast for 5.5% growth in 2023 (CY23). This translates into 8.4% and 6.5% in fiscal years 2022-23 and 2023-24, respectively,” Moody’s said in its latest Global Macro Outlook.

Moody’s said the speed of the recovery from the first lockdown-led contraction in Q2 2020, and subsequently in Q2 2021 during the Delta wave, was stronger than expected, and the economy is estimated to have surpassed the pre-Covid-19 level of gross domestic product (GDP) by more than 5 % in the last quarter of 2021.

“Sales tax collection, retail activity and PMIs suggest solid momentum. As is the case in many other countries, the recovery is lagging in contact-intensive services sectors, but it should pick up as the Omicron wave subsides. With most remaining restrictions now being lifted with the improvement in the Covid-19 situation, including the reopening of schools and colleges for in-person instruction across various states, the country is on its way to normalcy,” it added.