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Fitch Ratings has slashed India’s GDP growth forecast to a six-year low of 5.5% in the current fiscal, as a large squeeze in credit availability emanating from non-bank financial companies (NBFCs) is exacerbating the downward pressure from the slowdown in world trade.  

Key quotes

We expect economic growth to be 5.5% in 2019-2020, before picking up to 6.2% in 2020-2021 and 6.7% in 2021-2022. Nevertheless, growth is likely to significantly below its potential over the next year or so.  

The auto and real estate sectors have been particularly hit by NBFC credit rationing.

The recent weakness has been fairly broad-based, with both domestic spending and external demand losing momentum.

India’s growth rate slowed for the fifth consecutive quarter in the second quarter, with the gross domestic product (GDP) expanding by a meager 5%, down from 8%  recorded a year earlier.