The Moody Service Agency Investors Service Ratings has reduced its estimated growth for India for the current calendar year by 30 basis points from 9.1 percent to 8.8 percent.

For the following year, the agency has maintained an estimated 5.4 percent.

High frequency data shows that the momentum from the fourth quarter of 2021 was carried out for the first four months of this year due to the momentum of strong reopening,” Moody’s said on May 26 in an update for his global macro outlook report.

However, the increase in crude oil prices, food and fertilizer will burden household finances and expenses in the next months,” added the ranking agent.

The Russian invasion of Ukraine in February has led to an increase in global commodity prices, with the forecast of the Bank of India (RBI) reserve from April to project the headline retail inflation of 5.7 percent for FY23 – revised up to 120 basis points from its estimates before The Estimates before The The Estimate Before The Conflict in Europe Begins

This estimate is likely to be increased again next month after the data released on May 12 shows the inflation of the Consumer Price Index (CPI) has jumped to the highest 95 months 7.79 percent in April.

Moody’s saw inflation in India averaged 6.8 percent in 2022 before it was reduced to 5.2 percent in 2023.

India’s central bank can also reduce its growth estimate for FY23 – which currently reaches 7.2 percent – after announcing the first interest rate increase in almost four years on May 4 to contain price increases.

The level of increase to prevent energy and food inflation becomes more common will slow down the momentum of recovery of demand. But unless global crude oil and food prices rise further, the economy seems strong enough to maintain solid growth momentum,” Moody said.

Cutting in the estimated growth of India for 2022 by Moody’s came as part of a wider downward revision for global growth due to the Russian-Ukraine War and the locking of zero-covid policies in China which increased shocks and encourage higher inflation.

Moody’s now sees an advanced economy growing 2.6 percent in 2022, down from 3.2 percent which is estimated in March. The market economy is developing, on the other hand, it is expected to grow 3.8 percent of this calendar year, down from the previous estimate of 4.2 percent.

In 2023, the advanced and developing market economy was seen as growing 2.1 percent and 4.2 percent.

The three main developments will affect the macroeconomic conditions for the next two years: one, the evolution of Russian-Ukraine military conflict, two, speed and level of global monetary tightening, and three, China’s economic track,” Moody said.

He hoped that the Chinese economy would grow 4.5 percent in 2022 and 5.3 percent in 2023, with the risk of decline.