According to Global rating agency Fitch, India, China and Korea — three most powerful emerging Asian economies — are exhibiting delayed effects of tight monetary policies introduced in 2010-11 to tackle inflation.
According to Fitch:
- Slow upgrading in financial position of countries including India and China has come in the way of positive credit rating drive in rising Asia.
- India’s WPI inflation was 7.55% and the Consumer Price Index (CPI) inflation for was 10.36% for May 2012
- B/w March 2010 and October 2011 RBI had slashed repo rates 13 times to battle against inflation
- India’s GDP plunged to nine-year low of 5.3% for the three months ended March 2012
- The overall growth for 2011-12 stood at 6.5%
- China has a negative outlook on but it is positive for Korea
Positive rating momentum in emerging Asia has come to a standstill amid lethargic improvement in sovereign balance sheets and for a few countries, concerns over high and rising leverage in the private sector
Fitch had downgraded GDP growth projections to 6.5% in 2012-13, reduced from a previous projection of 7.5%. It has already downgraded India’s credit outlook to negative and attributed it to corruption and lack of reforms.