2023 Outlook - Year Of Reset, Recession, Recovery: Nirmal Bang's Analysis

Nirmal Bang Report

We see 2023 as a year of three parts. The first part will continue to see a ‘reset’ between the normal of the pre-pandemic era and the new normal of the post-pandemic era.

The ‘reset’ in our view, like most transformations, will carry its share of pain in the form of a ‘recession’. However, the 'recession’ may be shallow and short-lived, paving the way for a ‘recovery’ going into CY24.

We are penciling in gross domestic product growth of 6% in FY24 for India based on the premise of a shallow U.S. recession in CY23 (0-1% decline in U.S. GDP).

In an environment of slowing global growth, we expect commodity prices to remain relatively benign, easing the pressure on India’s macro fundamentals.

While our base case has been the end of monetary tightening by the U.S. Federal Reserve and the Reserve Bank of India by the end of CY22, we now see increasing possibility of rate hikes in early CY23 as well on the back of continued strength in macro indicators.

However, with inflation slowing and global growth moderating, we expect an extended pause through most of CY23, with rate cuts most likely by the end of CY23.

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