Friday Aug 23, 2019
India's gross domestic product (GDP) forecast for fiscal year 2019 was cut down from 6.8 percent to 6.2 percent by credit rating agency Moody's Investors Service, which cited "sluggish" economy and a combination of other factors behind its latest move.
According to Moody's, the Indian economy — "while not heavily exposed to external pressures" — remained quite slow owing to various factors, which included "weak hiring, financial distress among rural households, and tighter financing conditions due to stress among non-bank financial institutions".
The rating agency further noted that the Indian economy was influenced more by its internal factors, such as a contraction in the business scene and a sluggish credit flow, both of which have contributed to lesser investment.
“Cooler business sentiment and slow flow of credit to corporates contribute to weaker investment in India,” it added, pointing out further that inflation in the South Asian country was forecasted to rise from 2.9 percent in 2018 to 3.7 and 4.5 percent in 2019 and 2020, respectively.
Moody's also noted that although India's central bank, Reserve Bank of India (RBI), did cut rate in order to boost growth, the impact of the move may be dampened due to "lingering financial sector issues".
Moody's also revised its growth forecast for 16 other countries in Asia, citing weaker trade and investment.