New Delhi: Rating agency Fitch on Tuesday slashed India’s growth forecast for the next fiscal to 8.5 per cent from 10.3 per cent, citing sharply high energy prices on account of the Russia-Ukraine war.
With the Omicron wave subsiding quickly, containment measures have been scaled back, setting the stage for a pick-up in GDP growth momentum in the June quarter this year, the agency said.
It has revised upwards the GDP growth forecast for the current fiscal by 0.6 percentage points to 8.7 per cent.
However, we have lowered our growth forecast for FY 2022-2023 to 8.5 per cent (-1.8 pp) on sharply higher energy prices, Fitch said while revising up its inflation forecasts.
In its Global economic Outlook-March 2022, Fitch said the post-COVID-19 pandemic recovery is being hit by a potentially huge global supply shock that will reduce growth and push up inflation.
The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. Sanctions seem unlikely to be rescinded any time soon, the agency said.
Russia supplies around 10 per cent of the world’s energy, including 17 per cent of its natural gas and 12 per cent of oil.
The jump in oil and gas prices will add to industry costs and reduce consumers’ real incomes…Higher energy prices are a given, Fitch said as it cut the world GDP growth forecast by 0.7 percentage points to 3.5 per cent.
Observing that Indian GDP growth was very strong in the December quarter, the agency said the GDP is more than 6 per cent above its pre-pandemic level though it is still well below its implied pre-pandemic trend.
High-frequency data indicate that the Indian economy has ridden out the Omicron wave with little damage in stark contrast with the two previous coronavirus waves in 2020 and 2021, it said.
In its fourth week of the Russia-Ukraine war, new satellite images from Maxar Technologies shows damage from Moscow military strikes across Irpin, northwest of Kyiv in Ukraine.
Two distinct fires are seen in central Irpin near a complex of city government and apartment buildings.
The images show fires from military strikes and growing flooding from the Irpin River, CNN reported. The images, taken on Monday, also show Russian artillery positions west of the Russian-held Antonov Air Base northwest of the capital, Kyiv.
Two other fires can also be seen in another satellite image among a group of buildings near a school in the city and a residential area near a lake.
An additional satellite image shows growing floodwaters from the Irpin River. It’s unclear how the dam began flooding the Irpin River basin, whether the gates were opened on purpose by the Ukrainians to flood the area, or it was hit by a military strike.
According to CNN, a dam along the Dnieper River was flooding the Irpin River basin and its tributaries.
The Irpin River is critical to the Russian advance toward Kyiv; if the Russians cannot cross it, they can’t take Kyiv from the west. In the early hours of February 24, Russia launched a special military operation in Ukraine after the Donetsk and Luhansk People’s Republics (DPR and LPR) appealed for help in defending themselves against the Kyiv forces.
Russia said that the aim of its special operation is to demilitarize and “denazify” Ukraine and that only military infrastructure is being targeted – the civilian population is not in danger. Moscow has repeatedly stressed that it has no plans to occupy Ukraine.
