Moody's Investors Service has retained India's growth forecast at 7.5 per cent for the current year. In its latest assessment of the global economy, the company said the outlook for emerging markets economies has stabilised but oulined the policy changes post the US presidential election in November as the most immediate downside risks to the global economic outlook.
"Our growth expectations for India, Indonesia, Korea and Saudi Arabia are unchanged from our previous outlook publication in May," it said. Moody's, in its 'Global Macro Outlook 2016-17' had said that India's growth will pick up slightly, climbing to 7.5 per cent in 2016 and 2017, from 7.3 per cent in 2015. It, however, revised upwards estimates for China to 6.6 per cent citing strong fiscal and monetary support. "Moody's now expects China to grow at the rate of 6.6 per cent and 6.3 per cent in 2016 and 2017, respectively as compared to the previous forecast of 6.3 per cent and 6.1 per cent, with the higher growth rate being driven by significant fiscal and monetary policy support."
The US-based company said the modest upward revision in China growth would have minimal impact on its forecasts for the rest of the world as imports to China continue to fall. "Headwinds to emerging markets have moderated, driven by the economic stabilisation in China, the modest recovery in commodity prices, and the return of capital flows; however, we expect the US Federal Reserve to resume its interest rate tightening cycle at the end of this year," it said. "The political and geopolitical risks, including a rise in nationalist and protectionist policies, are among the downside risks to global growth. In this context, the most immediate risk is a potential renegotiation of global trade pacts and security alliances, after this year's US presidential election," Moody's added.
