Moody’s cuts India’s economic growth projections to 7% for 2022 as world recession looms: The global slowdown and rising domestic interest rates will depress economic momentum, according to Moody’s, which reduced India’s GDP growth projections for 2022 from 7.7% to 7%. This is the second time that Moody’s Investors Service has lowered its projections for India’s growth. From an estimated 8.8 percent in May, it had decreased projections for the current year to 7.7 percent in September.
- The projected real GDP growth for India in 2022 has been reduced from 7.7% to 7.0%. The agency stated in its Global Macro Outlook 2023–24 that the downward revision assumes higher inflation, high interest rates, and sluggish global growth will dampen economic momentum by more than what was previously anticipated.
- The global economy is on the verge of a downturn, owing to persistent inflation, monetary policy tightening, fiscal challenges, geopolitical shifts, and financial market volatility.
- Moody’s predicts that growth will slow to 4.8% in 2023 before rebounding to around 6.4% in 2024. A period of relative stability could emerge by 2024, if governments and central banks can navigate their economies through the current challenges.
What is Moody’s Investors Service?
- Moody’s Investors Service provides credit ratings, risk analysis, and research for companies, bonds, and government entities to investors.
- It is a company that assigns creditworthiness ratings to borrowers. The ratings, which take into account the expected loss to investors in the event of failure, are based on a standardised grading system.
- Founder: John Moody
- Founded: 1909, New York
- Headquarters: New York, United States
What is a Credit Rating Agency?
- Credit rating agencies are responsible for determining credit ratings, which assess a debtor’s ability to repay a loan by making timely principal and interest payments, as well as the possibility of default.
- Around 95% of the global rating market is controlled by the top three international credit rating agencies- Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s (S&P).
- The Securities and Exchange Board of India (SEBI) has registered seven credit rating companies in India:
- India Ratings and Research Private Limited
- Acuite Ratings & Research
- Infomerics Valuation and Rating Private Limited
- Brickwork Ratings India Private