RBI lowers GDP growth projection to 7% for 2022-23

Reserve Bank of India Governor Shaktikanta Das said during the MPC announcements on Friday that GDP projection for 2022-23 has been reassessed to 7 per cent. The RBI MPC projected GDP growth for 2022-23 at 7.2 per cent in the previous meeting. He said that Q1 reported a growth of 13.5 per cent, while Q2 GDP is projected to grow at 6.3 per cent, Q3 4.6 per cent, and Q4 4.6 per cent. The first quarter of 2023-24 is expected to grow at 7.2 per cent.

"The headwinds from extended geopolitical tensions, tightening global financial conditions and possible decline in the external component of aggregate demand can pose downside risks to growth," said the Governor. 

Speaking about the GDP growth in the first quarter of 13.5 per cent, Governor Das said that while real GDP growth in the first quarter was lower than the expectations, it was the highest among major global economies.

"While real GDP growth in Q1:2022-23 turned out to be lower than our expectations, the late recovery in kharif sowing, the comfortable reservoir levels, improvement in capacity utilisation, buoyant bank credit expansion and government’s continued thrust on capital expenditure are expected to support aggregate demand and output in H2:2022-23," he said. 

Das said that in the last 2.5 years, the world saw two major shocks – COVID-19 and the Ukraine war. These shocks have produced a profound impact on the global economy, he said. “As if that was not enough, we are now in the midst of a third major storm arising from aggressive monetary policy actions and even more aggressive communication, mostly from advanced country central banks,” said Das.

He said the country’s ‘steely resolve’, its journey in the past 2.5 years, and the withstanding of the shocks of COVID-19 and the Ukraine war have given the country the confidence to face the new storm.

The lowering of GDP growth comes after the MPC projected a growth of 7.2 per cent in 2022-23, with Q1 projection at 16.2 per cent. However, Q2, Q3 and Q4 projections were lower than today’s announcements at 6.2 per cent, 4.1 per cent and 4.4 per cent.

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