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Moody's pegs India's growth at 7.5% for next two years, says India insulated from turmoil

agamdilawari

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NEW DELHI | MUMBAI: India has emerged as the sole ray of sunshine in an OECD global forecast clouded with gloom. It's the only large economy that's been upgraded by the Organization for Economic Cooperation and Development, which pared growth forecasts for all the others. It has raised India's growth forecast for 2016 to 7.4%, cut the global growth estimate to 3% and kept China's unchanged at 6.5%.

In what will come as a boost for the Modi government, which has been drumming up investment at the Make in India Week, the OECD forecast followed positive comments by Moody's. In its Global Macro Outlook released on Thursday, Moody's said India is relatively insulated from external turmoil and put growth for the country over the next two years at a stable 7.5%.

Stocks were buoyant, shrugging off recent tumult, and advancing for the second day led by positive global market cues. These included the US Federal Reserve's comments that it may not consider a faster pace of interest rate hikes this year due to fragile global economic conditions and Iran coming to terms with Saudi Arabia and Russia to freeze oil output levels. The Moody's report chimed with this sentiment.

The Sensex gained 1.14% to close at 23,649 points while the Nifty advanced 1.17% to 7,191, a shade below the immediate critical level of 7,200.

"India will continue to grow robustly, by 7.4% in 2016 and 7.3% in 2017," OECD said in its report published on Thursday. OECD's previous 2016 growth forecast was 7.3% for India and 3.3% for the world. China is expected to continue re-balancing its economy from manufacturing to services, with growth forecast at 6.5% in 2016 and 6.2% in 2017. By contrast, Brazil's economy is experiencing a deep recession and is expected to shrink by 4% this year and will only begin to climb back up next year. Monetary authorities need to be proactive, OECD suggested.

"In emerging market economies, monetary support should be provided where possible, taking into account inflation developments and capital market responses," it said.

Moody's pegs India's growth at 7.5% for next two years, says India insulated from turmoil - The Economic Times
 

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