Categories: Economy

UN slashes India’s Economic Growth Forecast by 20 bps to 5.8% for 2023

The United Nations (UN) has cut its GDP growth forecast for India for calendar year 2023 to 5.8 percent, citing the effect of tighter monetary policy and weak global demand. Growth in India is expected to remain strong at 5.8 percent, albeit slightly lower than the estimated 6.4 percent in 2022, as higher interest rates and a global slowdown weigh on investment and exports, the UN’s World Economic Situation and Prospects 2023 report, published, said.

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More About The Report:

The report is written by the UN’s Department of Economic and Social Affairs, the UN Conference on Trade and Development, and the regional economic commissions for Africa, Europe, Latin America and the Caribbean, Asia and the Pacific, and Western Asia.

Tighter Monetary Policy Hindering The Growth:

Like several other central banks around the world, the Reserve Bank of India (RBI) reacted to elevated inflation and hiked the policy repo rate by 225 basis points in 2022 to 6.25 percent. The rapid monetary tightening is expected to drag growth down, with the central bank’s latest forecast saying India’s GDP growth will edge down to 6.5 percent in 2023-24.

About Inflation:

On Indian inflation, the UN report said headline retail inflation is expected to average 5.5 percent in 2023, down from 6.7 percent in 2022. 

High and persistent inflation globally suggests scope for international coordination among central banks to minimise the negative spillover effects of aggressive monetary tightening on the global economy, especially among vulnerable developing countries.

UN’s Projection For World Economy:

As per the UN report’s latest forecast, global economic growth is seen slowing down to 1.9 percent in 2023 – one of the lowest in recent decades – from 3.1 percent previously forecast. The UN estimates that global growth in 2022 was 3 percent.
The report has projected global trade to contract 0.4 per cent and the world economy to grow at 1.9 per cent in 2023.
Piyush Shukla

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