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Moody’s cuts India’s GDP growth target to 6.2% for 2019; weak global economy weighs on investment

Moody’s on Friday cut India’s 2019 GDP growth forecast by 60 bps to 6.2 percent and 2020 GDP growth forecast by 60 bps to 6.7 percent.

India economic growth, Nomura report, Nirmala Sitharaman, GDP growth, Central Statistics Office
India's economic growth slowed to 6.8 per cent in 2018-19 – the slowest pace since 2014-15.

Moody’s on Friday cut India’s 2019 GDP growth forecast by 60 bps to 6.2 percent and 2020 GDP growth forecast by 60 bps to 6.7 percent, TV news channel CNBC-TV18 reported. Earlier this year, Moody’s had projected India to grow at 7.3 per cent in calendar year 2019 and 2020 on account of government spending ahead of general elections. The global rating agency revised its growth forecast for 16 Asian economies in its latest report. Weaker global economy has stunted Asian exports and uncertain operating environment has weighed on the investment, the rating agency also said. “Moody’s also says that the slower overall GDP growth in the region has not yet weighed significantly on broader employment conditions, while generally benign inflation supports purchasing power across Asia Pacific,” the rating agency also said.

Earlier this month, the rating agency CRISIL revised its growth estimate for 2019-20 (FY20) to 6.9 per cent, from its earlier estimate of 7.1 per cent saying that the outlook for a spurt in consumption and private investment looks bleak in the short term. In its August bi-monthly monetary policy review, the RBI also lowered the GDP growth rate for 2019-20 lower to 6.9 per cent, as compared to earlier estimate of 7 per cent.

Also read: Modi’s $5 trillion dream: these key factors will prop economic growth

The International Monetary Fund (IMF) has already cut India’s growth by 30 basis points for the calendar years 2019 and 2020 to 7 per cent and 7.2 per cent, respectively, due to weaker-than expected outlook for domestic demand.

Meanwhile, Moody’s Investors Service, in July last month, warned that the growth in economy in the coming 12-18 months will continue to remain weak as against the last few years. It could  result in the creation of new non-performing loans (NPLs) in the retail and small- and medium-enterprise segment, it had added. However, Moody’s also said that the 12-18 month outlook on the banking system in India is stable.

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First published on: 23-08-2019 at 15:43 IST