Moody’s cuts India’s 2018 growth forecast to 7.3 pc from 7.5 pc

Moody’s cuts India’s 2018 growth forecast to 7.3 pc from 7.5 pc

Economic Affairs Secretary Subhash Chandra Garg said on Monday it was expected that annual growth was between 7.3 and 7.5 percent in the March quarter.

Real GVA (at basic constant 2011-12 prices for 2017-18) is now estimated at Rs 119.76 lakh crore, showing a growth rate of 6.5 per cent over first revised estimates of GVA for 2016-17 of Rs 112.48 lakh crore.

Moody's Investors Service, a credit rating firm on Wednesday estimated a 7.3 per cent growth in Indian Gross Domestic Product (GDP) for the year 2018, thereby cutting it down from a previously projected 7.5 per cent. He said, good growth in the fourth quarter has reflected in GDP numbers.

After growth slowed sharply for much of 2017, India regained its status as the world's fastest-growing major economy for the October-December quarter. However, construction and financial services showed some improvements.

The quarterly gross value added stood at 7.6 percent for the January-March 2018 period. Similarly, construction sector GVA rose 11.5 per cent in the fourth quarter as compared to 3.9 per cent a year ago. "The growth is likely to realise from pick-up in consumption, especially rural consumption, with the forecast of normal monsoon, increased public sector spending and uptick in performance of the manufacturing sector in coming quarters". The Q1 GDP data should give the monetary policy committee enough comfort (on growth) to focus on upside inflation risks.

Trudeau, Macron, Europe deplore 'illegal' Trump tariff decision
He said: "If there were to ever be a trade war which is what so many people are calling this, the U.S. would stand to win". David O'Sullivan, the EU's ambassador in Washington, said the retaliation will probably be announced in late June.

With growth proving robust and prices on the rise, the Reserve Bank of India may change its policy stance next week.

"The Indian economy is in cyclical recovery led by both investment and consumption. This shows the economy is on the right track and is set for even higher growth in the future", Piyush Goyal, Minister of Finance, Government of India said.

Aditi Nayar, Principal Economist, ICRA, said, "We expect the economic growth to consolidate above 7 per cent in 2018-19, on the back of the continued benefits of the implementation of the GST, healthy consumption demand, government expenditure, and a back-ended pickup in investment activity".

Talking about growth rates in 2018, Madhavi Bokil, Moody's VP Senior Credit Officer said market turbulence in emerging market counties poses the risk of a negative effect on several countries, while also highlighting the escalating trade tensions between the U.S. and China as being another looming threat.

"A United States dollars 10/bl increase in crude prices can impact growth by ~ 20-30 bps". But they have identified higher crude oil price and its impact on inflation, current account deficit and overall growth as risk factors that are expected to weigh on the RBI's (MPC), which meets next week.

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