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With the Omicron wave subsiding rapidly, containment measures have been scaled again, setting the stage for a pick-up in GDP progress momentum within the June quarter this 12 months, the company mentioned.
It has revised upwards the GDP progress forecast for the present fiscal by 0.6 share factors to eight.7 per cent.
“Nevertheless, we have now lowered our progress forecast for FY 2022-2023 to eight.5 per cent (-1.8 pp) on sharply increased vitality costs,” Fitch mentioned whereas revising up its inflation forecasts.
In its International financial Outlook-March 2022, Fitch mentioned the post-COVID-19 pandemic restoration is being hit by a doubtlessly big international provide shock that may scale back progress and push up inflation.
“The warfare in Ukraine and financial sanctions on Russia have put international vitality provides in danger. Sanctions appear unlikely to be rescinded any time quickly,” the company mentioned.
Russia provides round 10 per cent of the world’s vitality, together with 17 per cent of its pure gasoline and 12 per cent of oil.
” The bounce in oil and gasoline costs will add to trade prices and scale back shoppers’ actual incomes…Increased vitality costs are a given,” Fitch mentioned because it reduce the world GDP progress forecast by 0.7 share factors to three.5 per cent.
Observing that Indian GDP progress was very sturdy within the December quarter, the company mentioned the GDP is greater than 6 per cent above its pre-pandemic degree although it’s nonetheless nicely beneath its implied pre-pandemic development.
“Excessive-frequency information point out that the Indian financial system has ridden out the Omicron wave with little harm –in stark distinction with the 2 earlier coronavirus waves in 2020 and 2021,” it mentioned.
Fitch now sees inflation strengthening additional, peaking above 7 per cent within the December quarter of 2022, earlier than progressively easing.
The company expects inflation to stay elevated all through the forecast horizon, at 6.1 per cent annual common in 2021 and 5 per cent in 2022.
“Native gas costs have been flat over the previous weeks, however we assume that oil corporations will ultimately go on increased oil costs to retail gas costs (with some offset from a discount within the excise obligation by the federal government),” it added.
