OECD Slashes India’s GDP Growth Forecast To 6.9 Per Cent For FY23

OECD has predicted Saudi Arabia to take the top spot in terms of GDP growth at 7.8 per cent

OECD's growth projections for India are lower than the World Bank's estimates, which in its recent report said India’s economy will grow at 7.5 per cent in FY22-23.

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The Organisation for Economic Cooperation and Development (OECD) has forecast India’s GDP growth at 6.9 per cent for FY23 from 8.1 per cent estimated earlier. This is also below the Reserve Bank of India’s estimate of 7.2 per cent.

OECD's growth projections for India are lower than the World Bank's estimates, which in its recent report said India’s economy will grow at 7.5 per cent in FY22-23.

India recorded the strongest rebound from the pandemic-related downturn among G20 economies. However, momentum is dissipating due to weaker external conditions, rising global food, and energy prices and the tightening of monetary policy, noted the Paris-based organisation.

The ongoing conflict between Ukraine and Russia has adversely impacted India's growth prospects as the country is a major importer of energy, fertilisers, and edible oils. 

On Wednesday, the Monetary Policy Committee (MPC) of the RBI raised the repo rate by 50 basis points to 4.9 per cent to tame soaring inflation and vowed to focus on the withdrawal of the 'accommodative' policy stance.

Forecast by OECD

OECD in its statement said that India won’t be the fastest growing economy in the FY22-23. Saudi Arabia takes the top spot in terms of GDP growth.

The organisation has highlighted certain reasons in the following mentioning why India's GDP has been slashed. 

Russia-Ukraine War – The price of the war

• Growth forecast slowing down according to prediction
• Rising inflation, largely driven by steep increases in the price of energy and food

India forecast for FY22-23

• Forecast by Organisation for Economic Cooperation and Development (OECD) was released on June 8, 2022
• In June 2022 - 6.9 per cent growth in the current financial year from 8.1 per cent estimated earlier
• Reasons: Indian economy is progressively losing momentum as inflationary expectations remain elevated because of rising global energy and food prices, monetary policy normalises, and global conditions deteriorate

Forecast for different countries by OECD (FY22-23)

• Saudi Arabia– 7.8 per cent
• India – 6.9 per cent
• China – 4.4 per cent
• United States – 2.5 per cent
• United Kingdom – 3.6 per cent

Share of goods that are on waiting container ships

• January 2022- 10.94 per cent
• February 2022- 10.34 per cent
• March 2022 - 12.13 per cent
• April 2022 - 11.56 per cent
• May 2022- 11.81 per cent

Source: OECD

Growth forecast by the World Bank

• April 2022– Cut forecast from 8.7 per cent to 8 per cent
• June 2022– Projected at 7.5 per cent
• Reasons - Rising inflation, supply chain disruptions, and geopolitical tensions