Moody's Growth Outlook: Uncertainty has gripped the world once again following Russia's ongoing offensive against Ukraine.
Due to the Russian "special military operation", the stock markets around the world, including in India, are witnessing a decline.
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Crude oil has crossed $100 a barrel, which is bad news for the world as well as India.
Meanwhile, International rating agency Moody's Investors Service has slashed India's growth forecast for the current year from 9.5 per cent to 9.1 per cent. It says expensive fuel and fertilizer import bills could limit the government's capital expenditure.
In its Global Macro Outlook 2022-23 (March 2022 Update), Russia's invasion of Ukraine will hurt economic growth. The rating agency said India's economic growth rate in 2023 is likely to be 5.4 per cent.
It further stated that India is particularly vulnerable to high oil prices as it is a major importer of crude oil. India is a surplus producer of cereals, so agricultural exports will benefit in the short run from higher prevailing prices.
Moody's said, "Higher fuel and potential fertilizer costs will put a burden on the government exchequer in the future, potentially limiting planned capital expenditure."
"For all these reasons, we have slashed our 2022 growth projections for India by 0.4 per centage points. We now expect the economy to grow at 9.1 per cent this year," it added.
It said that the forecast revisions also factor in the somewhat stronger underlying momentum than the agency had not accounted for previously, PTI reported.
(With Agency Inputs)