Nomura lowers GDP forecast for 2022-23 to 4.7%

Nomura on Wednesday sharply lowered India's gross domestic product (GDP) growth forecast for 2023 to 4.7% from 5.4% estimated earlier on the back of the global economic slowdown, elevated inflation and rising interest rates. 

However, it maintained its growth projection for 2022 at 7.2%, highlighting a robust near-term economic growth outlook.

Suggesting that India's economy was resilient to global shocks in the near term, Nomura in the note highlighted that the economy is growing above its pre-pandemic level, led by a sharp recovery in services and supported by the lagged effects of eased financial conditions and a public capex push.

It said the improvement has been broad-based across consumption, investment, industry and the external sectors. 

However, it noted exports have started to struggle and elevated imports are pushing up monthly trade deficits to record highs.

The gap between India's merchandise exports and imports widened to the highest ever monthly level of $25.63 billion in June, according to preliminary data released by the department of commerce.

While Nomura lowered the inflation forecast for 2022 and 2023, it said that upside risks to inflation persisted from continued pass-through of higher input costs, services reopening, pending electricity tariff revisions and high inflationary expectations.