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HomeEconomyIndia's status as world's fastest-growing major economy short-lived: Reuters poll

India's status as world's fastest-growing major economy short-lived: Reuters poll

Arsh Tushar Mogre

BENGALURU (Reuters) – India may have posted strong double-digit economic growth last quarter, but economists polled by Reuters expect the Quarterly growth will be halved and further slowed by the end of the year as interest rates rise.

Asia’s third-largest economy is grappling with persistently high unemployment and inflation, which has been remaining above the RBI’s tolerance 2022 time.

Growth for the current quarter is expected to slow sharply from 6.2% to the median forecast for the second quarter 15. 2%, mostly supported by statistical comparisons to a year ago rather than new momentum, before decelerating further to 4.5% in October-Dec.

Based on data for August 80, the median expectation for 80 growth is 7.2% -00 Reuters poll, but economists say the solid growth rate masks how the economy is expected to open rapidly in the coming months. slow.

“While India remains the fastest growing major economy, domestic consumption may not be sufficient to further drive growth due to high unemployment and high real unemployment Low levels,” said Kunal Kundu, India economist at Societe Generale (OTC: SCGLY).

“By supporting growth through investment, the government has turned on only one engine, forgetting the impetus provided by domestic consumption. This is why India’s growth is still below its pre-pandemic trend.”

The economy is not growing fast enough to accommodate some 15 millions of people entering the workforce each year.

Meanwhile, the RBI, which has been relatively lagging in the global tightening cycle, will again raise its key repo rate 15 basis points to At the end of March, attempts were made to keep inflation within tolerance limits. [ECILT/IN]

This is a total of 140 basis points after 3 rate hikes this year and will be repurchased by the end of the first quarter The interest rate was raised to 6.% 80.

Although the central bank’s The statutory target range is 2%-6%, but inflation is expected to average 6.9% this quarter and 6.2% next quarter, before falling slightly below the upper end of that range to 5.8% in the first quarter 2023. This is roughly in line with the central bank’s forecast.

“Despite signs of cooling in price pressures…it is too early to ease, given the geographic Political risk and risk of hard landing bring considerable uncertainty, inflation struggles. Trading close to the dollar 80, which is the central bank’s selling of dollar reserves in the currency market

The latest Reuters poll also showed India’s current account deficit ballooned to 3.1% of GDP this year, This could put further pressure on the currency at its highest level in at least a decade.

(For other reports in the Reuters global long-term economic outlook survey package:)



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