Global rating agency Fitch and the United Nations have slashed India’s projected economic growth for 2022. While the UN has downgraded the growth by over 2% to 4. 6%, Fitch slashed forecast to 8.5% for the fiscal 2022-23 from its earlier projection of 10.3%, citing the impact of surging energy prices against the backdrop of the war in Ukraine. New Delhi is expected to face restraints on energy access and prices, reflexes from trade sanctions, food inflation, tightening policies and financial instability, according to a UN report. The UN Conference on Trade and Development (UNCTAD) report downgraded its global economic growth projection for 2022 to 2.6% from 3.6% due to shocks from the Ukraine war and changes in macroeconomic policies that put developing countries particularly at risk.
Fitch said high-frequency data indicated that the Indian economy has ridden out the Omicron wave with little damage - in stark contrast with the two previous coronavirus waves in 2020 and 2021. The PMI for the services sector showed only a slowdown in activity in January and February - well short of an outright decline. Industrial production managed to record a small rise in January, at the height of the Omicron driven wave. With the wave subsiding quickly, containment measures have been scaled back, setting the stage for a pickup in GDP growth momentum in the second quarter of 2022.
