Moody's ups India growth estimates to 9.5% in CY2022 on stronger recovery
- IBEF
- February 25, 2022
In its update on Global Macro Outlook 2022-23, rating agency Moody's has raised India's economic growth estimates for CY2022 from 7% to 9.5%, citing a stronger-than-expected rebound following the shutdown in 2020 and the Delta wave of Covid-19 in 2021.
Sales tax collection, retail activity, and the Purchasing Managers Index, according to Moody's, indicate steady momentum. High oil prices and supply disruptions, on the other hand, continue to be a drag on India's economy.
The recovery after the first lockdown-induced contraction in Q2CY2020, and then during the Delta wave in Q2CY2021, was faster than projected. In the last quarter of CY2021, the economy is predicted to have outperformed the pre-Covid level of GDP by more than 5%. It kept its 5.5% growth target for CY2023.
The recovery in contact-intensive services industries is lagging behind, as it is in many other nations, but it should pick up as the Omicron wave declines. With the improvement in the Covid situation, India is on its road to normalcy, with most remaining restrictions being lifted, including the reopening of schools and colleges for physical attendance.
Budget 2022 prioritises growth, with a 36% increase in capital expenditure allocation to 2.9% of GDP in FY23, which the government hopes will attract private investment. The Reserve Bank of India kept interest rates steady in February, indicating that monetary policy remained supportive.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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