People walk in a crowded market amid the spread of the coronavirus disease (COVID-19), in the old quarters of Delhi, India, April 6, 2021. REUTERS/Anushree Fadnavis

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April 22 (Reuters) – UBS on Friday lowered India’s economic growth forecast for 2022-23 by 70 basis points to 7%, citing slowing global growth due to high commodity prices and weak local demand due to rising energy prices, inflationary pressures and a difficult economic crisis. labor market.

The downgrade comes a week after the World Bank lowered its economic growth forecast for India and the whole of South Asia, citing worsening supply bottlenecks and rising risks. inflation and the Ukrainian crisis.

“We believe that the pass-through of high global commodity prices to the real economy will affect household purchasing power and corporate margins, and limit the fiscal space available for investment spending,” the statement said. UBS economist Tanvee Gupta Jain in a note.

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India meets nearly 80% of its oil needs through imports, and rising crude prices are driving up the country’s trade and current account deficit while hurting the rupee and fueling imported inflation.

Earlier this month, the Reserve Bank of India raised its inflation forecast for the current fiscal year to 5.7%, 120 basis points above its February forecast, while cutting its estimate economic growth at 7.2% against 7.8%. Read more

UBS expects India’s gross domestic product to grow at a rate of 6% per year beyond FY2023.

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Reporting by Aniruddha Ghosh in Bangalore; Editing by Subhranshu Sahu

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