The United Nations Conference on Trade and Development (UNCTAD) on Thursday cut India's growth forecast for calendar year 2022 to 4.6% from 6.7% forecast earlier.

The trade body said India will face restraints on several fronts due to the Russia-Ukraine war. It cited energy access and prices, primary commodity bottlenecks, reflexes from trade sanctions, food inflation, tightening policies and financial instability as reasons for the downgrade.

In its update to the Trade and Development Report, UNCTAD also revised down its global economic growth projection for 2022 to 2.6% from 3.6% citing the war in Ukraine and tightening macroeconomic policy in developed economies.

"Global growth prospects for 2022 will be affected by downside risks to both supply and demand, compounded by the war in Ukraine. On the supply side, persistent disruptions will continue to hamper economic activity. At the same time, macroeconomic tightening will weaken demand while rising prices will erode real incomes and dampen investor confidence," the report said.

Before the outbreak of the war in Ukraine, global growth was already projected to slow in 2022 with the recovery from the pandemic shifting to more normal rates, pandemic restrictions abating and supply pressures continuing, it added.

"The economic reverberations of the war have led to significant downward revisions to growth figures, as incomes are squeezed further by increased food and fuel prices, global trade is curtailed by sanctions, and confidence and financial instability issues re-emerge. As a result of the conflict, oil and gas prices have surged from already elevated levels, wheat prices have reached levels not seen since the late 2000s, and a wide range of other items including fertilizers, metals and manufacturing inputs are facing severe supply shortages," the UNCTAD report stated.

"The global economy is, literally and metaphorically, staring down the barrel of a gun... The international community will also need to deal with the widespread economic damage that the conflict is already causing in many parts of the developing world; damage that will only intensify as the conflict persists," it said.

In the advanced economies, central banks are beginning to raise interest rates from historic lows and selling some of the assets they purchased during the decade of quantitative easing.

Two immediate impacts of the war in Ukraine have been exchange rate instability and surging commodity prices, particularly for food and fuel, according to UNCTAD. "The danger for many developing countries that are heavily reliant on food and fuel imports is more profound, higher prices threaten livelihoods, discourage investment and raise the spectre of widening trade deficits."

Russia and Ukraine account for over a quarter of global wheat exports.

With elevated debt levels from the pandemic, sudden currency depreciation can quickly make debt service unsustainable and tip some countries into a downward spiral of insolvency, recession and arrested development, the report said.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.