Fitch raises India's growth forecast; asserts rupee one of the 'worst performing' currency in Asia
Fitch said India's near-term growth prospect remained robust despite trade tensions. Photograph: (Reuters)
Global credit agency Fitch today raised India's growth forecast in 2018-19 to 7.4 from 7.3 per cent although it placed rising oil prices as a risk toward India's growth.
"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.
Moody's had cut India's growth to 7.3 from 7.5 per cent last month. Fitch pegged India growth next year to a steady 7.5 per cent.
In April, Fitch had placed India's sovereign rating at 'BBB-' with 'stable' outlook, saying that the country's medium-term growth potential is strong. Moody's had earlier upgraded India's rating after a gap of 14 years.
The rating agency, however, cautioned that India's rupee was the worst performing currency in Asia, noting however that it was in a better situation than five years ago.
"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," Fitch observed.
Fitch said India's near-term growth prospect remained robust despite trade tensions.