Moody’s Cuts India’s 2018 Growth Forecast

International rating company Moody’s Investors Service has cut India’s growth forecast to 7.3% for 2018 from 7.5%, projected earlier, on the back of higher oil prices, although it expects the country to benefit from acceleration in rural consumption due to a normal monsoon and higher support prices.

A re-escalation of trade tensions between the US and China is another risk factor to global growth, according to the company.

Moody’s expects China’s growth to decelerate to 6.6% in 2018 and further to 6.4% in 2019. India’s economy is projected to grow by 7.5% in 2019.

Moody’s expects growth to get an upside from an acceleration in rural consumption, supported by higher minimum support prices and a normal monsoon.

It cautioned, “Ongoing transition to the new Goods and Service Tax regime could also weigh on growth somewhat over the next few quarters, which poses some downside risk to our forecast.”

“However, we expect these issues to moderate over the course of the year.”

Moody’s expects strong global growth in 2018 similar to 2017, but expects some moderation by the end of 2018 and in 2019 as a number of advanced economies reach full employment, borrowing costs rise.

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