Home / Economy / India headed for slower growth in 2023: Moody‘s

NEW DELHI: India is headed for slower growth in 2023, more in line with its long-term potential, Moody’s Analytics said in its latest ‘APAC Outlook: A Coming Downshift’ on Thursday.

“Risks to this outlook are largely balanced. On the upside, inward investment and productivity gains in technology, as well as in agriculture could accelerate growth," the report said.

However, in case inflation persists, the Reserve Bank of India (RBI) would increase the repo rate above 6%, causing GDP to falter, Moody’s said.

In August, Moody’s had projected India’s growth to slow to 8% in 2022 and further to 5% in 2023, from 8.5% in 2021.

The report said that the economy of Asia-Pacific (APAC) was slowing down, with the region feeling the effects of slower global trade. Global industrial production has remained “fairly level" since it peaked in February just prior to Russia’s invasion of Ukraine.

“China is not the only weak link in the global economy. The other giant of Asia, India, also suffered a year-to-year decline in the value exports in October. At least India relies less on exports as an engine of growth than does China," said Steve Cochrane, chief APAC economist, Moody’s Analytics.

On regional outlook, Moody’s said even though India, as well as other major economies of APAC region are expanding due to their own delayed reopening from pandemic-related shutdowns, the expected slowdowns in Europe and North America, along with China’s sluggish economy, will cause 2023 to be a slower year than 2022 for economic growth.

"That said, a recession is not expected in the APAC region in the coming year, although the area will face headwinds from higher interest rates and slower global trade growth," Cochrane added.

In its World Economic Outlook released last month, the International Monetary Fund (IMF) had forecast global growth to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023.

India has emerged as "a bright light" at a time when the world is facing imminent prospects of a recession, IMF chief economist Pierre-Olivier Gourinchas had said.

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