Fitch reduces India’s growth prediction for FY23 to 8.5 percent due to rising energy prices and inflation.

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Fitch cut India’s GDP prediction for the next fiscal year to 8.5 percent from 10.3 percent, citing rising energy prices and inflation as a result of the Russia-Ukraine conflict.


The GDP growth prediction for the current fiscal year has been raised by 0.6 percentage points to 8.7%.
“However, due to considerably increased energy prices, we have cut our growth prediction for FY 2022-2023 to 8.5 percent (-1.8 percentage points),” Fitch added.

Fitch warned in its Global Economic Outlook-March 2022 that the recovery from the COVID-19 pandemic is being hampered by a possibly large global supply shock, which will slow growth and raise inflation.
“The conflict in Ukraine, as well as economic sanctions imposed on Russia, have put world energy supply in jeopardy. Sanctions are unlikely to be lifted in the near future “According to the agency.

Another global rating agency, Moody’s, cut India’s growth forecast for the calendar year 2022 from 9.5 percent to 9.1 percent last week, citing a high fuel and fertiliser import cost as a reason for the cut.
Russia provides about ten percent of the world’s energy, including 17 percent of natural gas and 12% of oil.

“The increase in oil and gas prices will increase industry expenses and lower real incomes for consumers… Increased energy prices are unavoidable “According to Fitch, the global GDP growth projection has been lowered by 0.7 percentage points to 3.5 percent.

As a result of the Russia-Ukraine conflict, international oil prices began to rise this year and reached a 13-year high of USD 140 per barrel earlier this month. On Tuesday, Brent was trading at USD 118.59 per barrel.

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