Moody's cuts India's 2018 growth forecast from 7.5% to 7.3%

03 Jun '18

2 min read

Moody’s Investors Service has reduced India’s 2018 growth forecast to 7.3 per cent from the earlier estimate of 7.5 per cent, citing the probable impact of higher oil prices and tighter financial conditions on the pace of acceleration. The company, however, maintained its 2019 growth forecast at 7.5 per cent in an update to its Global Macro Outlook: 2018-19.

“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,” it said in the update.

Growth should gain from accelerated rural consumption, supported by higher minimum support prices and a normal monsoon, a news agency reported citing the Moody’s update.

The ongoing transition to the new Goods and Service Tax (GST) regime could weigh on growth somewhat over the next few quarters, which poses some downside risk to the forecast, said Moody’s.

The G-20 countries 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. (DS)

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