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S&P Global Ratings on Monday cut India’s economic growth forecast for the ongoing fiscal by 30 bps to 7% amid slowing global growth. The rating company, however, said India would be less impacted than other countries owing to resilient domestic demand.

“We do see strength in domestic demand in India. There are some indicators continuing to show fairly resilient growth. There are a couple of risks on the horizon for domestic demand. The Reserve Bank of India has been tightening policy rates since the start of this year. So some of those effects are going to start to show up. While the government is likely to continue to prioritize capital expenditure for the next couple of budgets as well, private capex has been the missing engine of the overall growth story," said Vishrut Rana, an economist at S&P Global Ratings.

The S&P report said the global slowdown would impact export-led economies. India’s economic output will expand by 7% in FY23 and 6% in FY24.

The report added that China’s growth could remain subdued in the coming months, but should pick up in 2023 as the government eases its covid-zero stance and the property market stabilizes. Lower global growth and higher interest rates should slow other Asia-Pacific economies next year, S&P said. Rana anticipates that India could see more inflationary pressure on the core side but could see easing inflationary pressure on food and fuel in the next six months. “So, in India’s basket, food is nearly 40%. Wheat prices are under pressure on the upside and this is unlikely to abate over the next few months," Rana said.

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