The World Bank has cut the estimated Indian GDP for the fiscal year 2022-23 to 8% from 8.7% predicted previously, quoting the deterioration of supply congestion and increased risk of inflation caused by Russian invasion to Ukraine. The World Bank on Wednesday reduced its growth estimates for India, the largest economy in the region, up to 8% from 8.7% for the current fiscal year until March, 2023 and was cut by a full percentage of writing for South Asia, except Afghanistan 6.6 %.
The international lender said that in India, household consumption will be limited by incomplete recovery from the labor market of Covid-19 and inflationary pressures.”The price of oil and food caused by war in Ukraine will have a strong negative impact on the real income of the community,” Hartwig Schafer, World Bank Vice President for South Asia, said in a statement.Meanwhile, the Asian Development Bank Prospects 2022 previously said that India would likely maintain its position as a large economy that grew the fastest with a 7.5% growth rate for 2022-23 on a strong investment prospect of 5 percent for China in January-December 2022.ADB has said that India’s growth in the next fiscal year 2023-24 will accelerate further to 8%, even though China will witness a slowdown in growth to 4.8% by 2023.
The World Bank raised its growth estimates for Pakistan, the second largest economy in the region, for the current year which ended in June, to 4.3% from 3.4% and maintaining future growth prospects unchanged at 4%.Regional dependence on imports of energy means high crude oil prices forces their economies to hostage their monetary policy to focus on inflation rather than reviving economic growth after almost two years of restrictions on pandemic.
The World Bank cut the growth forecast this year for Maldives to 7.6% from 11%, quoting large imported fossil fuels and the deterioration of tourism arrives from Russia and Ukraine.This raises the estimated growth of 2022 which was hit by the Sri Lankan crisis to 2.4% from 2.1% but warned the view of the island was very uncertain because of fiscal and external imbalances.Sri Lanka’s central bank said on Tuesday it became “challenging and impossible” to pay foreign debt, because it tried to use decreased foreign exchange reserves to import fuel.
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