Moody's cuts India’s economy growth projection to 8.8 pc for 2022

Moody's Investors Service, a global financial services agency, has lowered India's GDP forecast for 2022 to 8.8 percent, down from 9.1 percent earlier. The reason for the cut was the current high rate of inflation. "With the exception of Russia, we do not currently expect any G-20 countries to experience a recession in 2022 or 2023," said Madhavi Bokil, Senior Vice President/CSR at Moody's.

"However, there are a number of risks that may wreak havoc on the economy, including more upward pressure on commodity prices, longer-lasting supply-chain disruptions, or a slower-than-expected recession in China." Furthermore, vigorous monetary tightening, which has been accompanied by concerns that long-term inflation expectations are becoming unanchored, could be a catalyst for a recession.

If the global economy can remain resilient over the next several months, the growth path could become more sustainable into next year, according to Moody's. Economies are returning to a post-pandemic normal, with some economic patterns reverting to pre-Covid trends and others undergoing lasting alterations. As the effects of the pandemic fade, households are spending more of their income on high-contact service activities and buying fewer products, according to the report.

Financial market volatility and asset repricing have increased when central banks tighten monetary policy in response to growing inflation. Bond rates have risen around the world in anticipation of more interest rate hikes, while stock prices have declined from their highs and the US dollar has gained, according to the report.

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