Moody's, Citigroup and more: Global agencies that have trimmed India's growth forecast for 2022

Several banks and financial institutions have cut their economic growth estimates for India for the current fiscal year (FY23) a day after the National Statistical Office released the April-June quarter gross domestic product (GDP) data. The NSO’s data showed that India’s GDP in the April-June 2022-23 quarter grew 13.5 percent, the fastest in the year. However, it fell far below the Reserve Bank of India’ forecast of 16.2 percent increase. Following this, ratings agency Moody’s, as well as Goldman Sachs, Citigroup and State Bank of India revised their estimates for India’s growth.

List of agencies who have trimmed India’s growth forecast for FY 22-23:

• Moody’s slashed its forecast from 8.8 per cent to 7.7 per cent, citing dampening economic momentum in the coming quarters on rising interest rates, slowing global growth and uneven monsoon. Moody’s also stated that the growth rate is set to decelerate to 5.2 per cent in 2023, as per a PTI report.
• Goldman Sachs trimmed GDP projection from 7.2 per cent to 7 per cent.
• Citigroup has slashed the growth prediction from 8 per cent to 6.7 per cent

SBI also revised its full-year growth forecast to 6.8 per cent from 7.5 per cent. “We are now revising our annual GDP growth for FY23 to 6.8 per cent, mostly due to statistical adjustments, but said growth momentum is likely to show an increasing momentum in the second half,” SBI’s group chief economic adviser Soumya Kanti Ghosh stated.

Furthermore, ratings agency Morgan Stanley has stated that the lower than expected growth has created downside risk of 40 basis points for the fiscal year 2022-23. The slightly weaker than expected growth rate came in despite the main drivers of domestic demand falling in line with the agency’s expectations, as per a statement by Santanu Sengupta, India economist at Goldman Sachs. “Despite the main drivers of domestic demand coming in line with our expectations, a large drawdown in inventories and statistical discrepancies came as a surprise,” he said.

Effect on markets:

The BSE and NSE started with marginal gains, but later fell during the volatile session. Both Sensex and Nifty were trading flat at 12:05 pm, with Sensex at 58,795.58 and Nifty 50 above the 17,500 level.

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