Fitch Ratings revises India’s growth estimate to 12.8%

American credit rating agency, Fitch, has published its ‘Global Economic Outlook (GEO)’. Fitch has revised GDP growth estimate of India to 12.8% for the fiscal year 2021-2022 from the previous 11%. Ratings were revised in the backdrop of loose fiscal stance, stronger carryover effect, and better virus containment.

Key Points

Ratings agency finds that level of India’s GDP will remain well below its pre-pandemic forecast trajectory. It also projects that GDP growth will ease to 5.8% in Fiscal Year 2023. In its report, fitch also highlights that India’s recovery from “lockdown-induced recession” in second quarter of 2020 has been swifter than expected. GDP has surpassed its pre-pandemic level in fourth quarter of the fiscal 2020-2021. As per the report, High-frequency indicators point for a strong start to 2021. Manufacturing Purchasing Managers’ Index PMI remained elevated in February, 2021. Report also highlights that, pickup in mobility and a rise in services PMI point to further gains in the services sector. Fitch also notes that, it doesn’t expect Reserve Bank of India (RBI) to cut its policy rate now because of brighter short-term growth outlook and limited decline in inflation.

Fitch Ratings Inc.

It is an American big credit rating agency along with the two big rating agencies, Moody’s and Standard & Poor’s. Fitch is one among the three nationally recognized statistical rating organizations (NRSRO) which was designated in 1975 by U.S. Securities and Exchange Commission. It is headquartered in New York and London. It was founded by John Knowles Fitch on in 1914 as Fitch Publishing Company in New York. The firm is the third largest NRSRO rating agency.

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