INSUBCONTINENT EXCLUSIVE:
earlier on weaker than expected economic momentum
In its latest Global Economic Outlook, Fitch also slashed GDP growth forecast for current fiscal year ending March 2019 to 6.9 per cent from
7.2 per cent projected in the December edition.The 6.9 per cent estimate is a notch lower than a 7 per cent growth estimated by the Central
Statistics Office (CSO) for the current fiscal year.The country's economy grew 7.2 per cent in fiscal year 2017-18."While we have cut our
growth forecasts for the next fiscal year (FY20, ending March 2020) on weaker than expected momentum, we still see Indian GDP growth to hold
up reasonably well at 6.8 per cent followed by 7.1 per cent in FY21," Fitch said.The rating agency said, India's GDP growth softened for the
second consecutive quarter in the October-December period at 6.6 per cent after clocking a growth of 7 per cent and 8 per cent in
July-September and April-June periods, respectively."The slowdown has been driven by cooling activity growth in the manufacturing sector
and, to a lesser extent, agriculture
Weaker momentum has been mainly domestically driven," Fitch said.It said credit availability has tightened up in areas heavily dependent on
non-bank financial companies (NBFCs), such as autos and two-wheelers, where sales have dropped.Also, food inflation has been muted and fell
into negative territory late last year, weighing on farmers' incomes.According to Fitch, the rupee is expected to weaken to 72 to a dollar
by the end of December 2019, and further to 73 by December 2020, from 69.82 to a dollar in end December 2018.It said, fiscal and monetary
policies are becoming more growth friendly and the RBI adopted a dovish stance and cut interest rates by 0.25 per cent last month."We have
changed our rate outlook and we now expect another 25 basis points cut in 2019, amid protracted below target inflation and easier global
monetary conditions than previously envisaged," Fitch said.Fitch also cut its global GDP forecasts for 2018 and 2019 at 3.2 per cent in 2018
and 2.8 per cent in 2019 from 3.3 per cent and 3.1 per cent respectively projected earlier.It, however, retained China's growth projections
at 6.6 per cent in 2018 and 6.1 per cent in 2019.It estimates oil prices to remain around 65 dollar to a barrel in 2019 and fall to $62.5 to
a barrel in 2020, from $71.6 a barrel in 2018.Get the latest election news, live updates and election schedule for Lok Sabha Elections 2019
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