Fitch Ratings has reduced its growth forecast for the current fiscal year to 7% from the previous estimate of 7.8%. The rating agency also cut its GDP growth forecast for the next fiscal year to 6.7% from the earlier estimate of 7.4% on September 14. Fitch’s latest FY23 growth estimate is lower than the RBI’s forecast of 7.2%.

In April-June, the supporting base effect helped to boost Indian GDP growth to 13.5%. However, according to a report, this wasn’t lower than Fitch’s expectations but also the RBI’s forecast of 16.2% and economists’ expectations of 15%. While the April-June GDP data disappointed Fitch as they expect the Indian economy to slow down the economic backdrop, elevate inflation, and tighten monetary policy. Fitch’s expectation of the global economy is to grow by 2.4% in 2022, down from 2.9% previously. In 2023, growth will be seen at 1.7% against the previous forecast of 2.7%.

The US is seen growing 1.7% in 2022 and 0.5% in 2023, going downward revisions of 120 and 100 basis points, respectively. China too is suffering the slowdown visibly, having the world’s second-largest economy seen growing by a mere 2.8% in 2022, down from 3.7% as projected earlier, due to Covid-19 and a prolonged property slump. “In 2023, China’s GDP expects to grow 4.5%.

Observing the Indian monetary policy, Fitch comments on its expectations towards the Reserve Bank of India (RBI) to increase the repo rate in the upcoming months, thus taking it to 5.9% before the end of the year. The RBI’s Monetary Policy Committee has scheduled to next meeting on September 28-30 wherein it would be focusing and expecting to raise the repo rate by 25-50 basis points from its current level of 5.4%.