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Indian Economy: Morgan Stanley slashes India’s GDP estimates, blames rising inflation and weak domestic demand

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Indian Economy: Due to rising prices of crude oil and decrease in domestic demand, the pace of economic growth of the country may slow down. Foreign brokerage house Morgan Stanley has made this prediction. The brokerage house in its report has reduced India’s economic growth forecast for the next two financial years. According to Morgan Stanley, India’s GDP is estimated to be 7.6 percent in the 2022-23 fiscal year, while in 2023-24 the GDP may be even less than 6.7 percent.

The impact of rising inflation on economic growth
Morgan Stanley’s Chief Economist Upasana Chachra for India has said that due to rising inflation, weak consumer demand, tight financial conditions. There will be a bad impact on the business sentiment as well as there will be a delay in the recovery of Capital Expenditure (CAPEX). Due to the rise in prices and rising commodity prices, inflation will increase, as well as the current account deficit can also increase to a 10-year high of 3.3 percent.

Russia-Ukraine war increased difficulties
Morgan Stanley’s reduction in the GDP growth rate for the next two years is pointing to the extent to which the rise in the prices of commodities and edible oil, including crude oil, due to the Russia-Ukraine war will affect India. have had side effects. In March, the retail inflation rate has reached 6.95 percent, which is the highest level of 17 months. Retail inflation is expected to be 7.50 percent in April. To control inflation, RBI has increased the repo rate. But due to the increase in inflation, the debt may become more expensive, which will affect the demand in the country.

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