After lowering outlook, Moody’s cuts India’s growth forecast to 5.6%

The Bombay Stock Exchange (BSE) building looms over old structures in Mumbai, India. Established in 1875, it is the oldest stock exchange in Asia. (Photo: iStock)


Days after lowering India’s sovereign ratings, Moody’s Investor Services on Thursday cut India’s growth forecast to 5.6 per cent, from it’s earlier 5.8 per cent due to subdued consumer demand, along with sluggish liquidity supply.

“We have revised down our growth forecast for India. We now forecast slower real GDP growth of 5.6 per cent in 2019, from 7.4 per cent in 2018,” it said.

It expects economic activity to pick up in 2020 and 2021 to 6.6% and 6.7% respectively, but the pace to remain lower than in the recent past

“India’s economic growth has decelerated since mid-2018, with real GDP growth slipping from nearly 8 per cent to 5 per cent in the second quarter of 2019 and joblessness rising.”

In the current slowdown consumption demand has “cooled” notably, the rating agency said. Last week, Moody’s had changed the outlook on the Government of India’s sovereign ratings to negative from stable and affirmed the Baa2 foreign currency and local currency long-term issuer ratings.

Moody’s had also affirmed India’s Baa2 local-currency senior unsecured rating and its P-2 another short-term local-currency rating.

India’s credit rating at Baa2 is the second lowest investment rating and Moody’s has warned that India could be heading for a debt trap and recessionary phase.

(With input from agencies)