The World Bank on Thursday reduced India’s projected gross domestic product (GDP) growth for the fiscal year 2022–23 from its earlier estimate of 7.5% to 6.5% due to concerns about a global recession in major industrialised nations.
The international banking organisation issued a warning that India’s economic outlook will continue to be hampered by the effects of the Russia-Ukraine war and a tightening of monetary policy globally.
“The spillovers from the Russia-Ukraine war and global monetary policy tightening will continue to weigh on India’s economic outlook: elevated inflation on the back of higher prices of key commodities and rising borrowing costs will affect domestic demand, particularly private consumption in FY2023/24, while slowing global growth will inhibit growth in demand for India’s exports,” it said in its latest update.
The World Bank research also stated that increased uncertainty and higher financing costs are likely to restrain the expansion of private investment.
The Reserve Bank of India (RBI) also reduced its forecast for the current financial year, from 7.2% to 7%, shortly after the World Bank cut its estimate of India’s growth.