World Bank trims India's GDP forecast for FY23 by 50 bps, citing inflation pressures

8 Jun 2022 , 10:30 AM

The World Bank, which is controlled by the United Nations (member countries), lowered India’s economic growth prediction for the current fiscal year to 7.5% on June 7, 2022. They have cited increasing commodity prices, supply chain disruptions, and geopolitical tensions as factors slowing progress.
 
This is the second time the apex bank has made a revision to the GDP growth forecast for this fiscal year. The United Nations-backed bank has lowered the forecast from 8.7% to 8% in the first revision of the year. In the second revision which happened yesterday, it was reduced to 7.5%.
 
Let’s take a brief look at what the World Bank has to say about the decision in its most recent edition of Global Economic Prospects. ” In the fiscal year 2022-2023, India’s growth is predicted to decrease to 7.5%. Rising prices, supply chain disruptions, and geopolitical tensions that were formed and dissipated during and after the worldwide pandemic will be the reasons for this.”
 
In a bittersweet vision, the World Bank’s 7.5 % projection is thought to be more optimistic than the RBI‘s 7.2% forecast. S&P rating agency and the International Monetary Fund (IMF) have also lowered their forecasts for India’s GDP growth in FY23 recently. The S&P Global ratings have cited rising inflation and the ‘never seem to be ending’ Russia- Ukraine conflict as the reason for their decision to lower the GDP forecast.
 
India’s economy grew 8.7% in FY22, making it the fastest growing economy in the world. Government expenditure in India has turned to infrastructure investment, labor restrictions have been eased, underperforming state-owned enterprises have been privatized, and the logistics industry is projected to be modernized and integrated, according to the World Bank.