(Reuters) – Morgan Stanley (NYSE) has cut its predictions for India’s economy growth over the next 2 fiscal years. The company said that global slowdowns, rising oil prices, weak domestic demand and a stronger dollar would have a negative impact on Asia’s third-largest country.

According to a brokerage note, Tuesday’s announcement stated that fiscal 2023 will see gross domestic product growth of 7.6%, and fiscal 2024 6.7%, respectively, which was 30 basis points lower then the prior estimates.

This cut is a result of a strong economic impact from Russia-Ukraine’s conflict. It has driven up crude price, driving retail inflation to India’s highest levels in 17 years. India is third largest oil importer and the third most populous country in the world.

Morgan Stanley’s India chief economist Upasanachachra stated that “the key channels for impact will likely to be higher inflation and weaker consumer demand”, tighter financial circumstances, an adverse effect on business sentiment, and delayed capex recovery.

She said that inflation and the current account deficit of the country will probably get worse because of broad-based price pressures, record-high commodity prices and record-high commodities prices.

India’s central bank increased its main lending rates to stop rising inflation. This was after a May off-cycle meeting that saw record levels. As inflation is high, the markets expect the Reserve Bank of India to increase its key rates even more in the future.

To ease the rising crude oil prices that recently reached $139 per barrel, Russia has been allowed to import oil at a discounted rate.

India gets almost 80% of its oil from imports. Rising crude prices cause India to increase its trade deficit and current account deficit. However, this also causes the rupee to fall and encourages imported inflation.