Sunday, March 10, 2013

India On The Mend, Moody's Says

India may be heading for a rebound, Moody’s Analytics said on Friday.


The risk analysis and consulting arm of Moody’s (not to be confused with the credit rating division) said India’s economy will be back to growing over 7% from 2014 onwards in a report titled “India: The Worst May Be Over.”

“The December quarter was likely the bottom of the economic cycle, and we anticipate a steady acceleration in GDP growth across the coming year. Our forecast from 2014 onwards is for economic growth of around 7%, which is India’s new rate of trend growth,” the report read.

The report assumes that in 2013-14 the global economy faces only mild financial volatility, domestic policy making continues at a slow but steady pace, and inflation cools enough to allow India’s central bank to cut interest rates.

“If any or all of these factors fall short, GDP growth will dip below 6% this year,” the report authors wrote. Last year, credit rating agencies were arguing for either a downgrade or a negative outlook on India debt, citing policy paralysis in New Delhi.

An HSBC analyst famously called India a “gasping elephant” last year when the economy grew barely above 5%.

India’s credit rating at Moody’s is Baa3, with a prime rating of 3, meaning there is no concern of India’s ability to pay its short term foreign debts.

The country is ranked on the low end of investment grade, outlook stable.

forbes.com

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