Based on International Monetary Fund (IMF) GDP figures, Britain has dropped behind India to become the world’s sixth largest economy, Bloomberg reported. With growth expected to be in the range of seven per cent this year, India will overtake the UK in dollar terms with only the US, China, Japan and Germany ahead.
Moody's Investors Service on Thursday slashed India's economic growth projection for 2022 to 7.7 per cent, saying that rising interest rates, uneven monsoon, and slowing global growth will dampen economic momentum on a sequential basis.
Moody's had in May projected India's GDP to expand by 8.8 per cent this year. The economy grew by 8.3 per cent in 2021 and contracted by 6.7 per cent in 2020, the year when the pandemic struck the country.
In its update to Global Macro Outlook 2022-23, Moody's said India's central bank is likely to remain hawkish this year and maintain a reasonably tight policy stance in 2023 to prevent domestic inflationary pressures from building further. "Our expectation that India's real GDP growth will slow from 8.3 per cent in 2021 to 7.7 per cent in 2022 and to decelerate further to 5.2 per cent in 2023 assumes that rising interest rates, uneven distribution of monsoons, and slowing global growth will dampen economic momentum on a sequential basis," Moody's said. It expects inflationary pressures to weaken in the second half (July-December) of the year and further in 2023.
A quicker let-up in global commodity prices would provide significant upside to growth. In addition, economic growth would be stronger than we are projecting in 2023 if the private-sector capex cycle were to gain steam, it added. Moody's said high-frequency data for the Indian economy shows strong and broad-based underlying momentum in the first four months of fiscal year 2022-23 (April-July). As per official GDP estimates, the Indian economy expanded 13.5 per cent in April-June 2022-23, higher than 4.10 per cent growth clocked in previous March quarter.