Moody's Investors Service has stated larger emerging markets like India are expected to continue to tighten their monetary policies next year. In its Global Macro Outlook for 2018-19, released in August, it wrote, “India, and Indonesia are likely to grow near trend despite external and domestic challenges. We expect larger emerging markets, like India, Indonesia, Brazil, Turkey, and Argentina, to continue monetary tightening in 2019.”
The US-based agency had said that it expects Indian economy to grow by around 7.5 per cent in 2018 and 2019 as it is largely resilient to external pressures like those from higher oil prices. Indian economy grew by 7.7 per cent in the January-March quarter, and touched a two-year high of 8.2 per cent in the April-June quarter. Moody's said India could also face political risks, as also uncertainty around economic and fiscal reforms, on account of upcoming general elections next year. The report also noted that the outlook for global sovereign creditworthiness in 2019 is “stable”, balancing the slowing growth momentum against rising uncertainty over longer-term economic and financial stability.
Managing Director- Global Sovereign Risk, Alastair Wilson said, “Our stable outlook for sovereign ratings in 2019 balances the benefits of continued global growth against emerging domestic and geopolitical risks.” He added, “Despite the stable outlook overall, we are more mindful than in previous years of the potential for unforeseen shocks to disrupt economic and financial stability over the next 12-18 months.”
The agency expects G-20 growth to peak in 2018 at 3.3% before slowing to 2.9% in 2019. For advanced economies in the G-20, Moody’s believes growth will fall to 1.9% in 2019 from 2.3% in 2018, a pattern that is mirrored in key economies, including the US and Germany. Emerging markets in G-20 would see a slower growth at around 4.6% in 2019 than 5% in 2018.
