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By Malvika Gurung
Investing.com — Amid the ongoing Russia-Ukraine war driving the global energy prices sharply higher, rating agency Fitch Ratings has slashed India’s growth forecast for the upcoming fiscal FY23 by 120 basis points from 10.3% to 8.5%.
At the same time, the American rating agency has raised India’s GDP growth forecast by 0.6 percentage points for the present fiscal FY22 to 8.7%, on account of the country’s economy tackling the Omicron wave with little damage, as opposed to the previous two Covid-19 waves.
The Russia-Ukraine crisis has sharply raised the energy and commodity prices, which will weigh on the pre-pandemic normalcy brought in by the subsiding Covid-19 scenario, contributing to inflationary pressures in 2023.
Multiple sanctions imposed on Russia by different Western nations, in response to its invasion of Ukraine have put a risk on global energy supplies, which will push up inflation and reduce growth. Besides, the sanctions do not appear to be rescinded any time soon, notes Fitch.
As Russia is a major world energy supplier, a jump in oil & energy prices will raise industry costs and reduce consumers’ real incomes.
Consequently, Fitch has cut the world GDP growth forecast in 2022 from 4.2% to 3.5%, and from 3% to 2.8% in 2023. At the same time, it pegs the Russian economy to contract by 8% in 2022.
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