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Indian growth will slow to 5.9% in 2023, says Goldman Sachs – Mintpaisa

India’s economic growth in 2023 is expected to slow to 5.9% from 6.9% in 2022, Goldman Sachs said in its India Outlook 2023 report.

“Growth will likely be split in two halves, with a slower first half as the stimulus fades and monetary tightening weighs on domestic demand. recovers, the drag on net exports eases and the investment cycle picks up speed,” Goldman Sachs said.

According to its forecast, headline CPI inflation is expected to decline to 6.1% in 2023 from 6.8% in 2022 as “active government intervention” would limit food inflation.

“We believe core inflation in goods has peaked, but upside risks to services inflation should keep core inflation around 6% [year-on-year]”, he added.

He said the Reserve Bank would likely increase the repo rate by 50 basis points / 35 basis points in December 2022/February 2023, bringing the repo rate to 6.75% by February 2023. inflation proceeds according to our forecast to reach 5.3% YoY in the fourth quarter,” he added.

Pointing out that India’s current account deficit would remain large given the slowdown in exports due to the global slowdown, he said resilient services exports would provide some cushion.

“However, growth capital may continue to drive India out as global companies seek to diversify their sources of supply and India presents an attractive long-term opportunity,” Goldman Sachs said.

He said policymakers would likely ease barriers to foreign capital inflows to achieve “inclusion in global bond indices in years to come.”

According to his forecast, the rupee would be at 84 against the US dollar in three months, dip to the 83 level in six months and reach the 82 level on a 12-month horizon.

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