Moody’s Investors Service today said the Indian economy is starting
to recover from the negative impact of demonetisation and disruption
caused by the GST roll-out, but kept GDP growth estimates unchanged at
7.6 per cent for 2018.
In its global growth forecasts for 2018
and 2019, Moody’s said the Budget for fiscal year beginning April 1
(2018-19) includes some measures to stabilise the rural economy that was
disproportionately hit by scrapping of high denomination Rs 500 and Rs
1,000 notes.
"There are some signs that the Indian economy is
starting to recover from the soft growth patch attributed to the
negative impact of the demonetisation undertaken in 2016 and disruption
related to last year’s roll-out of the Goods and Service Tax (GST),"
Moody’s said.
It kept the growth forecast for India in the
calendar year 2018 unchanged at 7.6 per cent and for 2019 at 7.5 per
cent. "Among the other major emerging market countries, we have left our
growth expectations for India and Indonesia unchanged."
In
November last year, Moody’s had raised India’s sovereign rating for the
first time in 13 years, saying growth prospects have improved with
continued progress on economic and institutional reforms. The US-based
agency had upped India’s rating to Baa2 from Baa3 and changed its rating
outlook to ’stable’ from ’positive’, saying the reforms would help
stabilise rising levels of debt.
At that time, it had projected
India’s real GDP growth to moderate to 6.7 per cent in the current
fiscal year ending March 31 (2017-18), from 7.1 per cent last year, and
put the growth at 7.5 per cent for 2018-19 fiscal. "The 2018 Budget
includes some measures that could stabilise the rural economy that was
disproportionately hit by the demonetisation policy and is yet to
recover," Moody’s said today.
"As we have said before, the bank
recapitalisation plan should also help credit growth over time, thereby
supporting growth," the agency added. Moody’s Investors Service revised
its global growth forecasts for 2018 and 2019, incorporating stronger
than expected economic data and reflecting the likely pick-up tied to
additional US fiscal stimulus.
It revised real GDP growth
forecasts upwards for the US, Japan, Germany, France, the UK, South
Korea, Russia, Saudi Arabia, South Africa and Turkey for 2018. The
rating agency raised its projections of real GDP growth for the US to
2.7 per cent in 2018 and 2.3 per cent in 2019, from a prior forecast of
2.3 per cent and 2.1 per cent, respectively. "These revisions account
for stronger than expected momentum going into 2018 and additional
fiscal stimulus from the February 2018 congressional budget deal. The
recent financial market sell-off does not alter Moody’s US and global
growth outlook," it said.
G20 economies will collectively grow 3.4
per cent in 2018 and 3.2 per cent in 2019, up from prior forecasts of
3.2 per cent and 3.1 per cent, respectively, Moody’s says. "Notably, the
euro area is exhibiting the best economic performance since the 2012
sovereign debt crisis."
Moody’s said stronger inflationary
pressures would lead to a steady convergence of the monetary policy
outlooks of global central banks over the next two to three years. The
current "Goldilocks" period of synchronised upward growth momentum, low
inflation, low interest rates, steadily rising asset prices and
historically low volatility will gradually wane, it said, adding the
recent return to financial market volatility is likely here to stay.