India’s central bank on Friday lowered its growth forecast for the 2022-23 financial year, and that of inflation, already strong, upwards, calling the war in Ukraine a “tectonic upheaval”.
The monetary institution of the third Asian economy now expects GDP growth of 7.2% for this financial year which runs from March 2022 to March 2023, against 7.8% previously.
Conversely, inflation is now expected to be higher (…) the assessment made in February, ie 5.7% against 4.5%, indicated the director of the Reserve Bank of India, Shaktikanta Das.
While India’s economic activity was rebounding after a period marked by the health crisis, it now faces new and daunting challenges, he added.
India notably imports more than 80% of its oil needs, the prices of which have increased significantly since the invasion of Ukraine by Russia on 24 February.
At this stage, the Indian central bank has however decided to keep its main key rate unchanged, 4%, a historically low level.
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For the first time, however, its director gave the signal of a future increase, citing an adjustment of the institution’s accommodative monetary policy, in order to ensure that inflation remains under control in the future.