Morgan Stanley lowers Indian growth forecast for inflation, global slowdown
Morgan Stanley has lowered its forecasts for India’s economic growth over the next two fiscal years as a global slowdown, rising oil prices and weak domestic demand would negatively impact Asia’s third-largest economy.
Gross domestic product growth will be 7.6% for fiscal 2023 and 6.7% for fiscal 2024, 30 basis points lower than previous estimates, the brokerage said in a note dated Tuesday.
The cut reflects the pronounced economic impact of the conflict between Russia and Ukraine, which has pushed up crude oil prices, pushing retail inflation in India, the world’s third-largest oil importer, to its highest level in 17 months. reached.
“The main impact channels are likely to be higher inflation, weaker consumer demand, tighter financial conditions, the negative impact on corporate sentiment and a slowdown in the recovery of capital spending,” said Upasana Chachra, Morgan Stanley’s chief economist for India.
Both inflation and the country’s current account deficit are likely to worsen due to broad price pressures and record high commodity prices, she added.
In an effort to contain unruly inflation, India’s central bank raised its key lending rate to record lows at an off-cycle meeting earlier in May. Markets see the Reserve Bank of India raising its key interest rates further in the coming months as inflation remains high.
The country has also imported oil from sanctioned Russia at discounted rates to ease some of the pressure from rising crude oil prices, which recently hit $139 a barrel.
India supplies nearly 80% of its oil needs through imports and rising crude oil prices are pushing up the country’s trade and current account deficit while also hurting the rupee and fueling imported inflation.
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)
