OECD pegs India’s FY23 economic growth at 6.9%

01 Jun 2022

On Wednesday, the Organisation for Economic Cooperation and Development (OECD) pegged India’s FY23 economic growth at 6.9%, the lowest by a major bank or institution.

As an energy, fertilisers, and edible oils importer, India is adversely impacted by the Ukraine war. Gross domestic product (GDP) growth reached 8.7% in FY22 and is projected to slow to 6.9% in FY23 and 6.2% in FY24, with less external demand growth and tighter monetary conditions being mitigated by strong government spending and an ambitious set of measures to facilitate the business environment, as per the June global macroeconomic report by OECD.

The institution said that inflation is projected to ease slowly, though staying above the central bank’s upper tolerance limit of 6% throughout 2022-23.

India registered the strongest rebound from the Covid-related downturn of any G20 economy but momentum is dissipating owing to weaker external situations, increasing global food and energy costs, and the tightening of monetary policy, as per the report.

The World Bank had cut its FY23 real GDP growth projection for India to 7.5% from 8%, on the back of inflationary and supply chain pressures and geopolitical uncertainties due to the Ukraine war.

This is the second time that the World Bank has modified its GDP growth prediction for India in FY23. It had cut the forecast from 8.7% to 8% in April.

Rating agency Standard and Poor's 500 (S&P) and the International Monetary Fund were among the agencies that had recently trimmed their FY23 forecast for India. At 7.5%, the World Bank’s forecast is still barely more bullish than the Reserve Bank of India’s (RBI) forecast of 7.2%.

India’s economy increased by 8.7% in FY22, making it the fastest-growing major economy in the world. The output was helped mainly by the agriculture sector and government final consumption expenses.

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Also read: India's property prices likely to rise 7.5% in 2022

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