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Inflation hit the economy, UBS reduced GDP growth forecast


New Delhi. Rising inflation is not only squeezing the common people but is creating hurdles in the development of the country. Due to the fire in the international prices of crude oil and commodities, there is a possibility of further increase in inflation in the coming times. Due to further increase in inflation, there will be a fall in demand, which will reduce the pace of the economy.

In view of this, investment bank UBS has cut India’s growth rate estimate. UBS has projected the Indian economy to grow at 7 per cent in the current financial year 2022-23. Earlier, UBS had estimated the growth rate to be 7.7 percent. The global situation remains worrying due to the Russia-Ukraine war. Because of this, all financial institutions including World Bank, IMF, ADB have cut estimates in India’s growth rate.

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lowest estimate ever
The 7 per cent estimate by UBS is the lowest ever. Earlier this month, the Reserve Bank had reduced the growth rate estimate to 7.2 percent, surprising everyone. The UBS report said that India’s domestic demand is expected to decline due to higher commodity prices, slowdown in the global economy and rising inflation. In the coming days, due to further increase in the prices of fuel, fertilizer, edible oil and food items, the purchasing power of the people will be affected.

Inflation rate will be 6.2%
According to the report, the pressure of inflation is clearly being seen in rural areas. It is affecting the economy. While the performance of urban areas is better. UBS expects average rate of retail inflation to be 6.2 per cent in FY 2022-23. In March 2022, the rate of retail inflation has flared up to reach a 17-month high of 6.95 percent.

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UBS believes that the Reserve Bank can increase the repo rate from June 2022 to control inflation. The increase in repo rate will make the loan costlier. It is possible to increase the repo rate by up to 1 percent by the end of the financial year.

Tags: GDP, GDP growth, India GDP, India’s GDP



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