Moody’s Investors Service on Wednesday raised India’s 2023 economic growth estimate to 5.5% from 4.8% earlier, thanks to a sharp increase in budget capital spending and resilient economic momentum.
However, it revised India’s 2022 growth estimate downward to 6.8 percent from 7 percent set in November last year.
In its February update to the Global Macro Outlook 2023-24, Moody’s raised baseline real growth projections for 2023 “significantly” for several G20 economies, including the US, Canada, the euro area, India, Russia, Mexico and Turkey, representing a stronger end to 2022.
“In the case of India, the upward revisions further incorporate the sharp increase in the capital expenditure budget allocation to Rs 10 trillion (3.3 percent of GDP) for the fiscal year 2023-24, up from 7 .5 trillion rupees for the fiscal year ending March 2023,” Moody’s said while projecting a 70 basis point increase in real GDP growth in 2023 to 5.5% and in 2024 to 6.5%. .
He said India’s growth projection has been “raised significantly” as strong data in the second half of 2022 created large carryover effects for 2023.
Moody’s said economic momentum in a number of large emerging market countries, including India, has proven more resilient than it had anticipated to last year’s tightening in the domestic and international financial environment.
An eventual loosening of monetary policy tightening in the US will help stabilize, if not improve, capital flows to emerging market countries. However, until inflation in advanced economies is firmly under control, emerging markets will remain vulnerable to bouts of increased volatility in financial markets, he said.
Regarding global growth, Moody’s said the year 2023 started on an apparently upbeat note for the global economy following positive surprises on several fronts, including the lifting of COVID-related restrictions in China, unusually warm weather that has helped Europe to cope with energy. crisis much better than expected, and better financial conditions.
Still, Moody’s expects global growth to continue to slow in 2023, with cumulative monetary policy tightening increasingly dragging on economic activity and employment in most major economies. “We forecast G-20 global economic growth to slow to 2% in 2023 from 2.7% in 2022, then improve to 2.4% in 2024.”
For China, Moody’s estimated GDP growth of 5% in 2023, up from 3% in 2022.
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