Fitch cuts India’s FY18 GDP growth forecast to 6.7 per cent

It also cut GDP growth forecast for 201819 fiscal year to 7.3 per cent from 7.4 per cent predicted in its September Global Economic Outlook (GEO). Fitch, however, expects GDP growth to pick up in the next two years on back of gradual implementation of the structural reform agenda and higher real disposable income. “The Indian economy picked up in 3Q17 (July-September), with GDP growing by 6.3 per cent year-on-year, up from 5.7 per cent in 2Q17. 

“However, the rebound was weaker than we expected, and we have reduced our growth forecast for the fiscal year to end- March 2018 (FY18) to 6.7 per cent from 6.9 per cent in the September GEO,” Fitch said in its latest GEO. The US-based ratings agency said growth has “repeatedly disappointed” in recent quarters, partly because of one-off factors including the demonetisation programme of November 2016 and disruptions related to the implementation of the GST in July 2017. 

Reversing a five-quarter slide in GDP growth, Indian economy bounced back from a three-year low to expand by 6.3 per cent in Jul-Sept as manufacturing revved up and businesses adjusted to the new GST tax regime. The GDP growth in Q2 of 2017-18 compares to 5.7 per cent in April-June, the lowest growth rate since the Modi government took office, and 7.5 per cent in the September quarter of the previous fiscal.