In its latest Global Economic Outlook released on Tuesday, the US-based Fitch ratings made a downward revision to India’s GDP growth forecast for the current fiscal year (FY) 2019-20.
Key Findings:
“Amid cooling activity in the manufacturing and agriculture sector, credit rating agency Fitch Ratings slashed India’s growth forecast to 6.6% for the current financial year from 6.8% projected earlier.
The Reserve Bank of India (RBI) is likely to cut interest rate by another 25 basis points later in 2019, which will push the policy repo rate down to 5.50%.
Monetary and regulatory easing from the RBI, along with a recovery in portfolio inflows, should support a recovery in credit to the private sector and reverse the drag from the negative credit impulse.
However, the agency retained its gross domestic product (GDP) growth forecast for the next fiscal (2020-21) at 7.1% and 7.0% for 2021-22.”
Despite the growth forecast downgrade, the Indian Rupee manages to keep the recovery mode intact vs. the US dollar, with USD/INR back in the red near 69.80 region. The cross faded an uptick to 70.12 once again in early trades.
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