New Delhi: Rating agency Fitch on Tuesday slashed India's growth forecast for the next fiscal to 8.5 per cent from 10.3 per cent, citing sharply high energy prices on account of the Russia-Ukraine war. With the Omicron wave subsiding quickly, containment measures have been scaled back, setting the stage for a pick-up in GDP growth momentum in the June quarter this year, the agency said.
It has revised upwards the GDP growth forecast for the current fiscal by 0.6 percentage points to 8.7 per cent. "However, we have lowered our growth forecast for FY 2022-2023 to 8.5 per cent (-1.8 pp) on sharply higher energy prices," Fitch said while revising up its inflation forecasts. In its Global economic Outlook-March 2022, Fitch said the post-COVID-19 pandemic recovery is being hit by a potentially huge global supply shock that will reduce growth and push up inflation.
"The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. Sanctions seem unlikely to be rescinded any time soon," the agency said. Russia supplies around 10 per cent of the world's energy, including 17 per cent of its natural gas and 12 per cent of oil. " The jump in oil and gas prices will add to industry costs and reduce consumers' real incomes...Higher energy prices are a given," Fitch said as it cut the world GDP growth forecast by 0.7 percentage points to 3.5 per cent.