Inflation to cool off in 2023, says Chandrasekaran, but warns of slow global growth

Tata Sons Chairman N Chandrasekaran (Illustration: Moneycontrol)

Inflation, which has soared in the second half of 2022, is "likely to gradually moderate" next year, but the slowdown in global growth "may act as a drag on output", Tata Sons' Chairman N Chandrasekaran has said.

The global environment has several risk factors, including the energy crisis in Europe, the battle to contain inflation to avoid recession, and ongoing geopolitical conflicts, Chandrasekaran said in a letter to Tata Group employees.

"Barring the pandemic and the global financial crisis, next year may mark the lowest global growth since the millennium began," the industry veteran warned.

Chandrasekaran, however, noted that India is "well positioned", and will continue to be the "fastest growing major economy", supported by increasing consumption, consumer confidence and investment.

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"Slowing global growth may act as a drag on output, but our rising share of global manufacturing should provide some buffer/insulation," he said.

Despite the global risk factors, "next year we are likely to see inflation gradually moderate", the Tata Sons chair added.

Chandrasekaran further pointed out that the "business momentum has been strong" for many of the Tata Group companies in 2022.

"We have experienced significant milestones during the year, including the welcoming of Air India back to the Group; the launch of Tata Neu; and Tata Motors passenger vehicles crossing 500,000 cars sold within a calendar year, with Tata EV cars accounting for 10 percent," he said.

Chandrasekaran also noted that Tata Group has "tremendous opportunity" in the midst of global transitions towards, sustainability and diversified supply chains.

"We have launched new initiatives to participate in global supply chains. On sustainability, we have devised a group-wide project — 'Aalingana' (Embrace). Our approach encompasses three interconnected pillars: reducing emissions to reach net zero by 2045; pioneering circular economies through sharing, reusing and recycling; and preserving and restoring nature and biodiversity," he stated.