International rating company Moody’s Investors Service has cut India’s growth forecast to 7.3% for 2018 from 7.5% projected earlier on the back of higher oil prices, although it expects the country to benefit from acceleration in rural consumption due to a normal monsoon and higher support prices. The Indian economy is in cyclical recovery led by both investment and consumption. However, higher oil prices and tighter financial conditions will weigh on the pace of acceleration
India’s statistical office will release the growth estimates for the financial year 2017-18 and last quarter of FY18 on 31 May 2018. In an estimate in February, it said the economy will grow 6.6% in the year. Moody’s expects China’s growth to decelerate to 6.6% in 2018 and to 6.4% in 2019. India’s economy is projected to grow by 7.5% in 2019. “We expect GDP growth of about 7.3% in 2018, down from our previous forecast of 7.5%. Our growth expectation for 2019 remains unchanged at 7.5%,” according to the outlook.
The private investment cycle will continue to make a gradual recovery, as twin balance-sheet issues – impaired assets at banks and corporates – slowly get addressed through deleveraging and the application of the Insolvency and Bankruptcy Code. Moody’s expects a strong global growth in 2018 similar to that in 2017, but expects some moderation by the end of 2018 and in 2019 as a number of advanced economies reach full employment and borrowing costs rise.