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Wednesday, August 17, 2022

Morgan Stanley slashes India’s GDP forecast for 2022 to 7.2 percent

Morgan Stanley slashed its forecast for India’s annual growth for this year to 7.2 per cent, as tight financial conditions and a slowdown in global trade put pressure on major economies around the world.

The brokerage’s forecast, down from its previous estimate of 7.6 per cent, comes after India’s economic growth hit its lowest in a year at 4.1 per cent in the first three months of 2022. The revised target is in line with the vision of the Reserve Bank of India.

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For the next year, Morgan Stanley is expected to touch 6.4 percent of annual GDP.

Global central banks have moved to sharply tighten monetary policies to curb rising inflation, raising concerns about a possible recession. Reserve Bank of India also last month
Prime interest rate hiked by 50 basis points.

India’s annual consumer inflation, which touched a multi-year high in the past few months, eased marginally to 7.01 per cent in June. The brokerage expects further relief.

Upasana Chachara, Chief India
Morgan Stanley economist said in a note on Sunday.

Chachra pegs the terminal repo rate at 6.5 per cent, and expects it to reach by April 2023. The central bank had last month raised the rate to 4.9 per cent.

“We expect that normalization in real rates will help maintain macro stability and provide a foundation for a sustainable growth recovery.”

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World Nation News Desk
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