Fitch slashes FY23 India growth forecast to 8.5 per cent on high energy prices

New Delhi, March 22

Rating agency Fitch on Tuesday slashed India’s growth forecast for the next fiscal to 8.5 per cent from 10.3 per cent, citing sharply high energy prices on account of the Russia-Ukraine war.

With the Omicron wave subsiding quickly, containment measures have been scaled back, setting the stage for a pick-up in GDP growth momentum in the June quarter this year, the agency said.

It has revised upwards the GDP growth forecast for the current fiscal by 0.6 percentage points to 8.7 per cent.

“However, we have lowered our growth forecast for FY 2022-2023 to 8.5 per cent (-1.8 pp) on sharply higher energy prices,” Fitch said while revising up its inflation forecasts.

In its Global Economic Outlook-March 2022, Fitch said the post-Covid pandemic recovery is being hit by a potentially huge global supply shock that would reduce growth and push up inflation.

“The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. Sanctions seem unlikely to be rescinded any time soon,” the agency said.

Observing that Indian GDP growth was very strong in the December quarter, the agency said the GDP is more than 6 per cent above its pre-pandemic level though it is still well below its implied pre-pandemic trend.