Next year, India is projected to be the fastest growing major economy despite further slowdown in GDP expansion — estimated at 5. 7% — due to moderation in domestic demand and exports, before it picks up to 6. 9% in 2024.
The downgrade for India comes along with a weaker forecast for the global economy in the wake of high inflation and a looming energy crisis over several parts of the world with the Ukraine war expected to increase the risk of debt distress for low-income countries and food scarcity, the agency said.
It warned that the Indian economy may not be able to escape the global slowdown and the impact of high interest rates as well as possible deterioration in asset quality of banks. “High medium-termglobal uncertainty reinforces the importance of continued efforts to raise potential output growth and resilience. Macroeconomic stability should be pursued through monetary policy geared towards anchoring inflation expectations and fiscal policyoriented towards debt control and targeting of current and capital spending. Improvements in the business climate, when combined with financial deepening and skills development, can boost investment and infraand create more and better jobs. ”