The international rating agency S&P Global Ratings has downgraded its forecast for the growth of the Indian economy for the current financial year to 7.3% due to accelerating inflation and a more protracted-than-expected conflict between Russia and Ukraine. In December 2021, S&P predicted that India’s GDP growth in fiscal 2022-2023 would be 7.8%. The updated S&P forecast says that inflation will remain high for a long time, which is a cause for concern and requires central banks to take measures to tighten monetary policy. This, in turn, puts pressure on economic growth. According to the S&P forecast, India’s economic growth in the next fiscal year will be 6.5%. “Risks to our forecasts have intensified and remain steadily down. The conflict between Russia and Ukraine, we believe, is more likely to prolong and escalate than to end earlier or weaken,” S&P said in a statement. Meanwhile, inflation in India in the current fiscal year is expected to be 6.9%. Following the start of the conflict between Russia and Ukraine and against the backdrop of rising commodity prices, India’s GDP growth forecasts were also revised by a number of other agencies. Thus, the World Bank in April worsened the forecast for the 2022-2023 fiscal year to 8% from 8.7%, the IMF – to 8.2% from 9%. In turn, the Reserve Bank of India last month lowered its economic growth forecast to 7.2% from 7.8% amid volatility in oil prices and supply chain disruptions. Meanwhile, rating agency Moody’s Analytics believes that India’s economy is recovering from the coronavirus pandemic and does not expect the situation in Ukraine to undermine this recovery. “Following a strong recovery of more than 9% in FY2021 ending in March 2022, we expect FY2022 GDP to increase by 8.2%, which will be the highest growth among the G20 countries,” the agency said. At the same time, Moody”s notes that the negative consequences for the global economy in connection with the situation in Ukraine will lead to accelerated inflation and higher interest rates in India, as well as create barriers to supplies. “Rising food prices will have a direct impact on inflation, while rising fuel prices will have an even more negative effect,” Moody’s said in a statement. Source: FINMARKET.RU

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