Moody's cuts CY22 India growth forecast to 8.8%

Says rise in crude, food, and fertiliser prices will weigh on household spending

- ASIT RANJAN MISHRA

Moody's Investors Service on Thursday lowered its gross domestic product (GDP) growth forecast for India to 8.8 per cent for the calendar year 2022 (CY22) from its March estimate of 9.1 per cent, holding that rising inflation and interest rates will temper the economic growth momentum.

"The rise in crude oil, food, and fertilizer prices will weigh on household finances and spending in the months ahead. Rate increases to prevent energy and food inflation from becoming more generalised will slow the demand recovery's momentum," the rating agency said in its latest Global Macro Outlook.

However, Moody's added that unless global crude oil and food prices rise further, the economy seems strong enough to maintain solid growth momentum.

"High-frequency data suggest that the momentum from Q4 2021 carried through into the first four months of this year because of strong reopening momentum. Strong credit growth, a large increase in investment intentions announced by the corporate sector, and a high budget allocation to capital spending by the government indicate that the investment cycle is strengthening," it added.