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NEW DELHI: The World Bank on Wednesday lowered India’s GDP growth estimate for FY23 to 8% from 8.7%, citing the impact of the war in Ukraine, high global oil prices, elevated inflation and supply disruptions.
“The recovery in private consumption will be constrained by the incomplete revival in the labour market, and inflationary pressures weighing on households’ purchasing power,” according to the South Asia Economic Focus report unveiled by the multilateral lender.
Several agencies have cut the country’s growth estimate against the backdrop of the war in Ukraine. Last week, the RBI lowered the GDP growth forecast to 7.2% from 7.8% and also raised the inflation forecast to 5.7% from of 4.5%. Policymakers have said that the war in Ukraine will have an impact on growth and stoke inflationary pressures due to the breakdown in supply chains and soaring global crude oil prices.
The report said increased government capital spending (especially in infrastructure and logistics), reduced vulnerabilities in the financial sector, government initiatives including the production-linked incentive scheme and improvement of the investment climate will support investment.
It said that the current account deficit will widen substantially as merchandise trade deficit increases on the back of rising commodity prices. Capital flows, especially foreign direct investment inflows, are expected to remain steady- given the reforms implemented to improve the business environment.
“The recovery in private consumption will be constrained by the incomplete revival in the labour market, and inflationary pressures weighing on households’ purchasing power,” according to the South Asia Economic Focus report unveiled by the multilateral lender.
Several agencies have cut the country’s growth estimate against the backdrop of the war in Ukraine. Last week, the RBI lowered the GDP growth forecast to 7.2% from 7.8% and also raised the inflation forecast to 5.7% from of 4.5%. Policymakers have said that the war in Ukraine will have an impact on growth and stoke inflationary pressures due to the breakdown in supply chains and soaring global crude oil prices.
The report said increased government capital spending (especially in infrastructure and logistics), reduced vulnerabilities in the financial sector, government initiatives including the production-linked incentive scheme and improvement of the investment climate will support investment.
It said that the current account deficit will widen substantially as merchandise trade deficit increases on the back of rising commodity prices. Capital flows, especially foreign direct investment inflows, are expected to remain steady- given the reforms implemented to improve the business environment.
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