Amid Russia-Ukraine War, High Crude Oil Price, India Ratings Lowers GDP Forecast to 7-7.2% For FY23

India Ratings also expects the private capital expenditure to take a hit on account of uncertainty in global commodity prices and supply chain disruption.

Bengaluru: Keeping in mind the impact of high crude oil and commodity prices on domestic consumption amid Russia-Ukraine conflict, the India Ratings on Wednesday lowered the country’s economic growth forecast for 2022-23 to 7.0-7.2% from 7.6% estimated earlier.

The rating agency in a statement said that in case the global oil prices stay at current levels for three months, the economy is estimated to expand 7.2%, and if oil prices remain high for the next six months, economic growth will go down to 7% in FY23. However, the rating agency said in both the cases, it is assumed that there will be a half-cost pass-through into the domestic economy, the Mint reported.

It is believed that the consumer sentiment will take a hit due to the Russia-Ukraine war leading to rising commodity prices and consumer inflation. However, the India Ratings expects the private final consumption expenditure to slow to 8.0-8.1% in FY23 from 9.4% projected earlier.

The rating agency estimated the retail inflation to average around 5.8% if oil prices remain high for three months and 6.2% if oil prices remain high for six months in FY23.

Moreover, the ratings agency also expects the central bank’s monetary policy committee to continue to maintain an accommodative stance through FY23 as it may want to support economic recovery.

India Ratings also expects the private capital expenditure to take a hit on account of uncertainty in global commodity prices and supply chain disruption.