What are current trends in India’s GDP growth forecast?

July 23, 2022

Recently, India’s GDP Growth Forecast for current financial year was lowered to 7.2 percent by Morgan Stanley. It marked a reduction by 40 basis points, as compared to last forecast. Growth forecast was lowered in light of a slowdown in global growth.
Trends in India’s GDP Growth:

Morgan Stanley has also reduced the Growth Forecast for 2023-24 by 30 basis points to 6.4%. India’s overall exports to GDP is at 21 percent.
India is witnessing a slower-than-expected global growth trend, which is likely to delay full-fledged growth recovery.
It would also weaken the external demand.
The downside risks are emerging due to weaker-than-expected global growth trend, faster tightening of financial conditions and supply-side-driven commodity price increase.
According to Morgan Stanley, Consumer Price Index inflation is likely to be about 6%, starting from November 21, 2022. Risks for the same could be due to unexpected changes in food price trajectory.
CPI inflation on an average be at 6.5 percent, as opposed to 7 percent earlier in the fiscal year 2022-23. For the next fiscal, CPI will remain at 5.3 percent.
The terminal policy repo rate is likely to reach at 6.5 percent by April 2023, against the current level of 4.9 percent.

However, Morgan Stanley remained constructive on medium-term growth path of India, despite the slower global growth trend. It expects supportive supply-side policy reforms, which would help the Indian economy to grow above pre-covid-19 pandemic rates in 2022 and 2023.

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