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India’s status as world’s fastest growing major economy will be short-lived – Reuters poll

It is likely that the India has posted strong double-digit economic growth in the last quarter, but economists polled by Reuters expect the rate to more than halve this quarter and slow further towards the end of the year as interest rates rise, according to the latest survey published on Monday.

Key results

yesGrowth this quarter is forecast to slow sharply to 6.2% YoY from a median forecast of 15.2% in the second quarter, supported mainly by statistical comparisons with a year ago rather than any new momentum, before slowing further to 4.5% in October-December.

The median growth expectation for 2022 was 7.2%, according to a Reuters poll conducted between August 22 and 26, but economists said the strong growth rate masks how quickly the economy is expected to move. slow down in the coming months.

Although the central bank’s target band is 2% to 6%, inflation was expected to be 6.9% and 6.2% on average this and next quarter, respectively, before falling just below the upper end of the range. band to 5.8% in the first quarter of 2023. This roughly coincides with the central bank’s forecasts.

The economy is also under pressure from inflation due to the weakness of the rupee, which for months has traded near 80 to the US dollar, a level the central bank has defended in currency markets by selling dollar reserves.

The latest Reuters poll also showed that India’s current account deficit has widened to 3.1% of gross domestic product this year, the highest in at least a decade, which may put further pressure on the currency.

Source: Fx Street

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