Chennai, March 7,2023:  India’s economic slowdown in the fourth quarter of 2022 is temporary and even salutary, Moody’s Analytics said in a report.

According to Moody’s Analytics, the country’s economic slowdown late last year will be temporary and even salutary, helping to wring some of the demand-side pressures out of the economy without stopping it wholesale.

“On the external front, better growth in the US and Europe’s incipient recovery will propel India at the midyear mark. The US and Europe are India’s largest trade partners and are important destinations for exports of business services,” Moody’s Analytics said.

India logged 4.4 per cent growth (down from 6.3 per cent in the previous quarter) logged during the third quarter of FY23 or fourth quarter of calendar year 2022.

With India’s domestic economy, rather than trade, is its primary engine, in contrast to most other emerging-Asia economies in mind, Moody’s Analytics observed India’s fourth-quarter performance (Calendar year 2022) with caution.

Growth slowed substantially on a year-ago basis, with private consumption lagging overall gross domestic product (GDP) for the first time since the Delta wave struck the economy in the second quarter of 2021.

Sectors such as manufacturing and agriculture that are highly linked to private consumption spending either contracted or barely grew, the report notes.

The normally faster-growing construction and retail and wholesale trade sectors came in somewhat hotter, though both lagged gains from earlier this year, Moody’s Analytics said.

While high interest rates have slowed the domestic economy and curbed imports, external imbalances have widened, putting pressure on the rupee and adding to inflation, the report added.