Good news for India’s economy, big relief announced by world’s largest conglomerate. Moody’s says the slowdown in economic activity is temporary

Moody’s Analytics says India’s domestic economy is the main engine of its growth, not trade. Apart from this, he said, the slowdown in economic activity last year will be temporary. Data released by the government last week showed India’s GDP growth fell to a three-quarter low of 4.4 percent between October and December 2022. The main reason behind this is the decline in production and lower spending on private consumption.

Why the decline in growth?

Where the manufacturing sector decreased by 1.1 percent. At the same time, personal consumption declined by 2.1 percent in the October-December quarter of the current fiscal year. In its outlook report on emerging markets, Moody’s Analytics said growth slowed significantly from a year earlier, with total GDP from private consumption falling in the second quarter of 2021 for the first time since the delta wave rocked the economy.

Moody’s also said the economic slowdown at the end of last year would be temporary and help ease some demand-related pressures. On the external front, good growth in the US and recovery in Europe will lead India to mid-year numbers.

Moody’s raises growth forecast

Earlier, Moody’s Investors Service raised India’s economic growth forecast for 2023 to 5.5 percent from 4.8 percent. The increase comes in the wake of a sharp increase in capital expenditure in the budget and improved economic conditions. Moody’s, however, cut India’s growth forecast for 2022 to 6.8 percent from the previous 7 percent. In its February update to the Global Broad Outlook 2023-24, Moody’s forecast growth for several G20 economies, including the US, Canada, Europe, India, Russia, Mexico and Turkey. The increase was due to a strong finish to 2022.

Moody’s said that in the case of India, the allocation for capital expenditure (3.3 percent of GDP) has increased sharply in the budget for the fiscal year 2023-24. This figure increased from Rs 7,500 billion to Rs 10,000 billion in the last financial year.