India's economy to grow at 6.9% in FY23: OECD global macroeconomic report

The Organization for Economic Cooperation and Development (OECD) on Wednesday pegged India’s FY23 economic growth at 6.9 per cent, the lowest by a  major bank or institution, saying the country had been adversely affected by Russia’s invasion of Ukraine.

“As an importer of energy, fertilisers and edible oils, India is adversely affected by the war in Ukraine. Gross domestic product (GDP) growth, which reached 8.7 per cent in FY22, is projected to slow to 6.9 per cent in FY23 and 6.2 per cent in FY24, with weaker external demand growth and tighter monetary conditions being mitigated by strong government spending and an ambitious set of measures to simplify the business environment,” OECD said in its June global macroeconomic report.

The institution said that headline inflation is projected to ease gradually, though remaining above the central bank’s upper tolerance limit of 6 percent throughout 2022 and 2023.

“India recorded the strongest rebound from the Covid-related downturn of any G20 economy, but momentum is dissipating owing to weaker external conditions, rising global food and energy prices and the tightening of monetary policy,” it said.

On Tuesday, the World Bank had cut its FY23 real GDP growth forecast for India to 7.5 per cent from 8 per cent, on the back of inflationary and supply chain pressures and geopolitical tensions due to the war in Ukraine.

This is the second time that the World Bank has revised its GDP growth forecast for India in FY23. In April, it had trimmed the forecast from 8.7 per cent to 8 per cent.

Ratings agency S&P and the International Monetary Fund were among the agencies that had recently cut their FY23 forecast for India. At 7.5 per cent, World Bank’s forecast is still slightly more bullish than the Reserve Bank of India’s forecast of 7.2 percent

India’s economy grew by 8.7 per cent in FY22, making it the fastest-growing major economy in the world. The output was helped primarily by agriculture sector and government final consumption expenditure.