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The United Nations Conference on Trade and Development (UNCTAD) has forecasted the Indian GDP to grow at a rate of only 5.7% in 2022 in its Trade and Development Report 2022.
This forecast is significantly lower than forecasts issued by private credit rating agencies such as Fitch, Moody's, S&P, Ind-Ra; or other entities like the ADB. All of the aforesaid entities have maintained their forecasts in the range of 7-7.3% for 2022, making their forecast the most conservative one.
“India, the largest economy of the region, economic activity is being hampered by higher financing costs and weaker public expenditures, resulting in a deceleration in GDP growth to 5.7% in 2022,” UNCTAD said.
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According to the report, Indian economic activity was being hampered due to "higher financing costs and weaker public expenditures". The report has also forecasted a growth of only 4.7% in 2023 for the Indian economy.
The report noted that the Asian region reported dynamic growth over the last decade, but was not immune to the global downturn. China has a forecasted growth rate of 3.9% in 2022 and 5.3% in 2023 i.e. higher than India's forecasted growth.
The report has also stated that the fiscal tightening and interest rate hikes in advanced economies, combined with the Russia-Ukraine war, climate change and crises from Covid, have resulted in a global downturn. Moreover, the report also stated that a policy-induced global recession could occur in the future, and the same would be worse than the global financial crisis of 2007-2009.
“Monetary and fiscal policy moves in advanced economies risk pushing the world towards global recession and prolonged stagnation, inflicting worse damage than the financial crisis in 2008 and the Covid-19 shock in 2020,” the report said.
Article by Aman Agarwal.
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