World Bank Lowers India’s FY23 GDP Growth Forecast To 8 Per Cent From 8.7 Per Cent

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The forecast of Indian economic growth has been peeled by the World Bank on Wednesday, quoting the deterioration of supply congestion and increased inflation risk caused by Russian-Ukrainian conflict.

According to a report by Reuters, the international lender reduced its growth estimates for India, the largest economy in the region, to 8 percent from 8.7 percent for the current fiscal year until March, 2023, and was cut by a full percentage of growth prospects for South Asia, Not including Afghanistan, up to 6.6 percent.

The report states that household consumption will be limited by the recovery of an incomplete labor market of pandemic pressure and inflation in the country, the bank said.

The price of high oil and food caused by war in Ukraine will have a strong negative impact on the real income of the community,” said Hartwig Schafer, World Bank Vice President for South Asia.

However, the World Bank raised its estimates of growth for Pakistan, the second largest economy in the region, for the current year ended in June, to 4.3 percent from 3.4 percent and maintaining future growth prospects unchanged at 4 percent.

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 up estimates of this year’s growth for Maldives to 7.6 percent from 11 percent, quoting large imported fossil fuels and the deterioration of tourism arrivals from Russia and Ukraine.

This raises the estimated growth of 2022 which was hit by the Sri Lankan crisis to 2.4 percent from 2.1 percent but warned the prospect 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.