Credit Suisse cuts India FY13, FY14 GDP growth forecasts on delayed RBI response
2012-12-06 12:30:31
Credit Suisse has lowered economic growth of India forecast marginally to 5.9 per cent from 6 per cent for the fiscal year ending March.
The investment bank also reduced its growth forecast for FY14 to 6.9 per cent from 7.2 percent, it said in a research note.
"This largely reflects the delayed RBI rate response, although we continue to stress that our projections are above those of the consensus," the bank said in a note.
On the contrary Goldman Sach expected India's economic growth to grow from 5.4% in 2012 to 7.2% in 2014, and remain high through 2015-2016.
Three factors drive Goldman Sach's view. These include, a decline in oil prices in real terms over the next few years, a more favorable external demand outlook and domestic structural reforms which can ease some supply-side constraints.
It sees headline inflation remaining high through the third quarter of 2013, before gradually coming off due to a waning of food and oil shocks. Core inflation remains elevated throughout. The investment ban also expects the Reserve Bank of India to cut policy rates by 50 bp in each of 2013, 2014 and 2015. Elevated core inflation prevents a more aggressive near-term easing.
Even Morgan Stanley raised India's FY13 GDP growth forecast to 5.4 per cent from 5.1 per cent, citing better-than-expected GDP growth for the September quarter and also the stabilization in non-agriculture growth indicators.
Country's economy grew 5.3 per cent from a year earlier in the July-September period, provisional GDP data showed on Friday.
The economy extended its long slump keeping it on track for its worst year in a decade and underscoring the urgency of politically difficult reforms to spur a revival.