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Amid higher inflation, slowing exports and an improving but still weak domestic demand, India Ratings and Research (Ind-Ra) in its ‘Research and Ratings Compendium’ has said that the ratio of Upgrades/Downgrades is likely to moderate.  The agency expects the economic growth to slow down to 4.0% - 4.5% in 2HFY23 from 9.7% in 1HFY23.

As per the report, the domestic economic activity from 2022 has been largely resilient to global macroeconomic headwinds. The economy has mostly returned to normalcy, as seen from high frequency indicators, including Index of Industrial Production (IIP) remaining positive for most part of 1HFY23 and mobility indicators returning to pre-pandemic levels.

It however said that the contraction of IIP in October 2022 along with high inflation, weak domestic demand and slowing exports are indicative of the challenges facing the economy resulting from the deteriorating global macroeconomic conditions for the rest of the fiscal.

Ind-Ra further noted that the Russian invasion of Ukraine has disrupted the global supply-chain as well as led to an upsurge in global energy and food prices. Major economies worldwide are witnessing runaway multi-decade high inflation, leading to a similarly paced global monetary policy tightening.