Moody’s cuts India’s growth forecast to 7.3 per cent from 7.5 per cent
In November, Moody’s upgraded the Government of India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the rating outlook to stable from positive. In November, Moody’s upgraded the Government of India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the rating outlook to stable from positive.
Moody’s Investors Service has cut India’s growth forecast to 7.3 per cent from the previous 7.5 per cent in 2018. However, it retained its 2019 growth forecast at 7.5 per cent.
“The Indian economy is in cyclical recovery led by both investment and consumption. However, higher oil prices and tighter financial conditions will weigh on the pace of acceleration. We expect GDP growth of about 7.3 per cent in 2018, down from our previous forecast of 7.5 per cent. Our growth expectation for 2019 remains unchanged at 7.5 per cent,” Moody’s said.
In November, Moody’s upgraded the Government of India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the rating outlook to stable from positive. Moody’s upgraded India’s rating after 13 years. India’s sovereign credit rating was last upgraded in January 2004 to Baa3 (from Ba1).
Moody’s said the economy should benefit from an acceleration in rural consumption, supported by higher minimum support prices and a normal monsoon.
The rating firm said the ongoing transition to the new goods and service tax regime could weigh on growth somewhat over the next few quarters, which poses some downside risk to the forecast. “However, we expect these issues to moderate over the course of the year.” For the world economy, Moody’s expected 2018 to be a year of robust global growth.
“However, global growth will likely moderate by the end of 2018 and in 2019 as a result of a number of advanced economies reaching full employment, and because of rising borrowing costs and tighter credit conditions in both advanced and emerging markets that will hamper further acceleration,” it said.
The G-20 countries, it said, will grow 3.3 per cent in 2018 and 3.2 per cent in 2019. The advanced economies will grow at a moderate 2.3 per cent in 2018 and 2.0 per cent in 2019, while G-20 emerging markets will remain the growth drivers, at 5.2 per cent in both 2018 and 2019, down from 5.3 per cent in 2017. Moody’s said downside risks to growth stem from emerging markets turmoil, oil price increases and trade disputes. “The ongoing financial turbulence in emerging markets poses risks of a broader negative spillover effect on growth for a range of countries beyond Argentina and Turkey, while there is a risk that high oil prices will be detrimental to consumption. A re-escalation of trade tensions between the US and China is another risk factor. Political concerns add to downside risks in Brazil, Mexico and Italy,” it said.
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