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UN cuts India's 2023 growth forecast by 20 bps to 5.8% on rate hike, global slowdown fears

The cut in the growth forecast for India is part of a raft of downward revisions made by the multilateral organisation, which has warned of a "looming debt crisis"

January 25, 2023 / 10:33 PM IST
The headquarters of the United Nations. (File image: Reuters)

The headquarters of the United Nations. (File image: Reuters)

The United Nations (UN) has cut its GDP growth forecast for India for calendar year 2023 to 5.8 percent, citing the effect of tighter monetary policy and weak global demand.

"Growth in India is expected to remain strong at 5.8 percent, albeit slightly lower than the estimated 6.4 percent in 2022, as higher interest rates and a global slowdown weigh on investment and exports," the UN's World Economic Situation and Prospects 2023 report, published on January 25, said.

The report is written by the UN's Department of Economic and Social Affairs, the UN Conference on Trade and Development, and the regional economic commissions for Africa, Europe, Latin America and the Caribbean, Asia and the Pacific, and Western Asia.

Like several other central banks around the world, the Reserve Bank of India (RBI) reacted to elevated inflation and hiked the policy repo rate by 225 basis points in 2022 to 6.25 percent.

The UN estimates that global growth in 2022 was 3 percent.

REGION2023 GROWTH FORECASTCHANGE IN FORECAST
World1.9%-120 bps
US0.4%-140 bps
Japan1.5%-70 bps
European Union0.2%-220 bps
Russia-2.9%-290 bps
Africa3.8%No change
China4.8%-40 bps
Brazil0.9%-130 bps

"Stronger international cooperation is more pressing than ever before, including to address the global challenges created by the pandemic, the food and energy crisis, the climate crisis and the looming debt crisis," the report said.