Fitch ups India growth forecast to 7.4% for FY19

Fitch Ratings on Wednesday raised India growth forecast for 2018-19 to 7.4 per cent from 7.3 per cent, but cited higher financing costs and rising oil prices as risks to growth.

For 2019-20, it estimated the country to grow at 7.5 per cent.

“We have revised up our forecast for 2018-19 growth to 7.4 per cent from 7.3 per cent in March. However, higher financing costs (stemming from monetary tightening and higher market premiums) and rising oil prices should limit the upside to growth,” Fitch said in its Global Economic Outlook. The economy grew at 6.7 per cent in 2017-18 and 7.7 per cent in January-March quarter.

Fitch said the Indian rupee has been one of the worst performing currencies in Asia this year, although the depreciation was more muted than during the 2013 taper-tantrum episode.

“India has better macroeconomic fundamentals than in 2013 and very low foreign ownership rates in the domestic government bond market, but the current account deficit has been widening as a result of rising oil prices, reviving domestic demand, and poor manufacturing export performance,” it said.