Moody’s Investors Service on Thursday revised India’s GDP forecast down to 9.1 percent from 9.5 percent for 2022.
As per Global Macro Outlook 2022-23 (March 2022 updated), India is particularly vulnerable to high oil prices given that it is a large importer of crude oil.
Lately, the geopolitical crisis involving Russia and Ukraine have pushed Brent crude oil price higher.
Currently, Russia is the third-largest producer of crude oil in the world.
For India, the trend of high crude prices is alarming since it imports nearly 85 percent of its needs.
Besides, the cascading effect of higher fuel cost will trigger a general inflationary trend.
On the other hand, the March update pointed out that India’s agricultural exports will benefit in the short term.
“Because India is a surplus producer of grain, agricultural exports will benefit in the short term from high prevailing prices.
“High fuel and potentially fertilizer costs would weigh on government finances down the road, potentially limiting planned capital spending.”
In addition, the update said: “We now expect the economy to grow by 9.1 percent this year, followed by 5.4 percent in 2023.
“Our forecast revisions also factor in the somewhat stronger underlying momentum than we had not accounted for previously.”
