In September, Fitch forecast growth of 7% for the current fiscal year, followed by 6.7% in 2023-24 and 7.1% in 2024-25. Case

On Dec. 6, Fitch Ratings kept India’s economic growth forecast at 7% for the current fiscal year, but cut projections for the next two fiscal years, saying the country is not immune to global developments. .

In its December edition of the World Economic Outlook, Fitch projected India’s GDP growth of 7% in the current fiscal year, to a slower pace of 6.2% in 2023-24 and 6, 9% in 2024-25.

In September, Fitch forecast growth of 7% for the current fiscal year, followed by 6.7% in 2023-24 and 7.1% in 2024-25.

Given stronger than expected results in the July-September quarter with GDP growth of 6.3%, Fitch expects growth of 7% for the year ending March 2023 (FY23).

Read also | India on track to achieve 6.8-7% GDP growth this fiscal year: ECA

“India is expected to register one of the fastest growth rates among emerging markets in our Fitch20 coverage this year,” he said.

Separately, the World Bank on Tuesday revised up its GDP growth forecast for India to 6.9% for 2022-23 from 6.5% projected in October, saying the economy was showing greater resilience to global shocks.

India’s economy grew by 8.7% in the financial year 2021-22.

The global rating agency said India was to some extent insulated from global economic shocks given the domestic nature of its economy, with consumption and investment constituting the bulk of the country’s GDP.

“However, India is not impervious to global developments. The global economic slowdown is expected to reduce demand for Indian exports,” Fitch said.

The agency also revised down global GDP forecasts for 2023 as central banks step up their fight against inflation and the outlook for China’s property market deteriorates.

Fitch now expects global GDP growth of 1.4% in 2023, revised down from the 1.7% projected in September. China’s growth forecast for 2023 has also been cut to 4.1%, from 4.5% earlier, as prospects for a recovery in housebuilding fade.

“Controlling inflation is proving more difficult than expected as price pressures widen and entrench. Central bankers need to take off their gloves. It won’t be good for growth,” said Fitch Ratings chief economist Brian Coulton.

Regarding India, Fitch said tight monetary policy and high inflation also contributed to slowing imports, slower personal loan growth and lower purchasing power. Tighter financial markets are also weighing on demand for capital goods, which serves as a leading indicator of investment.

“That said, economic resilience is reflected in optimistic labor market conditions, with falling unemployment and improving labor market participation,” Fitch added.

Inflation fell to 6.77% in October, although core inflation rose again after moderating over the summer, and household inflation expectations remain elevated as the Food price inflation remains high, Fitch said.

“The weakness of the rupiah against the US dollar adds to the RBI’s inflationary concerns given that a third of the CPI basket is made up of imports,” he said.

The RBI has raised rates by a cumulative 190 basis points since the start of the tightening cycle in April 2022, lagging the Fed’s 350 basis point increases over the same period.

“The RBI has already stepped in to support the Rupee and further rate hikes are likely to support the currency and reduce underlying inflationary pressures. We now expect the RBI to raise key rates to 6.15% by December and then maintain that rate through 2023,” Fitch said.

The RBI’s monetary policy committee is expected to raise benchmark interest rates on Dec. 7 from the current 5.90%.