Fitch lowers India’s growth forecast to 6.9%

Fit ch Ratings has lowered India’ s economic growth forecast for the current fiscal year to 6.9 percent from 7.4 percent, after GDP growth “unexpected ly faltered” in the April-June quarter. The credit rating agency said that it expected economic activity to accelerate in the second half of FY 18 with the waning impact of one-off events, including the demo net is at ion shock in late 2016 and the GST roll-out in July, which had dampened growth in the short term.

The Fitch Ratings has lowered India’s economic growth forecast for the current fiscal to 6.9 per cent from 7.4 per cent after the GDP growth “unexpectedly faltered” in the April-June quarter.

However, the credit rating agency said that it expects the economic activity to accelerate in the second half of the financial year with the waning impact of one-off the events including the demonetisation shock in late 2016 and the goods and service tax (GST) roll-out in July, which had dampened growth in the short-term.

“The large stock of non-performing loans on the bank balance sheets could, however, dampen the outlook for credit growth and business investment,” as per the Fitch Ratings in its latest Global Economic Outlook (GEO).

The Asian Development Bank (ADB) had last month slashed India’s GDP growth forecast for the current financial year to 7 per cent from 7.4 per cent owing to weakness in private consumption, manufacturing output and business investment.

India had posted a 7.1 per cent growth in 2016-17. ADB pencilled in 7.4 per cent for 201819, down from the earlier forecast of 7.6 per cent in July.

The Fitch Ratings said that the global economy has improved markedly this year and is on course to recording its fastest expansion since 2010.

India’s GDP growth at 5.7 per cent in the first quarter (April-June), down from 6.1 per cent in the previous year, is “the lowest out-turn since early 2013, and GDP has now been cooling for five consecutive quarters”, it said.

The economic activity in the quarter, it said, may have been disrupted by firms running down inventory ahead of the implementation of the GST in July.

The manufacturing sector lost steam in the quarter, growing at a meagre 1.2 per cent year-on-year.