Fitch Ratings ups India's growth forecast to 7.8% for FY19
Fitch Ratings today upped India's growth forecast for the current fiscal to 7.8% from 7.4% projected earlier. In its Global Economic Outlook, Fitch, however, flagged tightening of financial conditions, rising oil bill and weak bank balance sheets as headwinds to growth. "We have revised up our forecast for FY2018-2019 growth to 7.8% from 7.4% on the back of the better-than-expected 2Q18 outturn," Fitch said.
Indian rupee worst performing Asian currency so far this year
The Indian rupee (INR) has been the worst-performing major Asian currency so far this year. "And despite the central bank's greater tolerance for currency depreciation, interest rates have been raised by more than anticipated," the global rating agency said in the report.
Factors responsible for India's robust growth
The upward revision in growth forecast comes in the backdrop of the GDP expanding 8.2% in April-June quarter, higher than Fitch's expectation of 7.7%. "This robust performance was partly attributable to a powerful base effect, with GDP growth dampened in 2Q17 (April-June) by companies de-stocking ahead of the rollout of the goods and services tax," the Fitch Ratings said.
Fitch cut growth forecasts for FY20 by 0.2 percentage points
Fitch has cut the growth forecasts for FY 2019-2020 and FY 2020-2021 growth by 0.2 percentage points to 7.3%. "Fiscal policy should remain quite supportive of growth in the run-up to elections likely to be held in early 2019. The investment/GDP ratio has stopped trending down, helped by ramped-up public infrastructure outlays, in particular by state-owned enterprises (SOEs)," it said.
