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Fitch revises India's growth forecast to 6%

Source: PTI
July 01, 2009 15:07 IST
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Global rating agency Fitch has revised upwards India's growth projection to 6 from 5 per cent for the current fiscal and said the recent election results should provide additional confidence and spur growth.

"The change in the forecast is consistent with the change in our global view...In India, this is topped by the recent election results, which should provide an additional confidence in the economic outlook, and spur investment," Fitch's Asia-Pacific sovereign ratings head, James McCormack told PTI.

Earlier, the rating agency said it expects India's growth to slow to about 5 per cent in the current fiscal due to recession in advanced economies and the reduction in capital flows.

Fitch further said that there have been some encouraging signs in terms of Indian industrial production, with the April numbers turning positive, and the Purchasing Managers Index has recovered strongly.

Industrial production grew 1.4 per cent in April after contraction for months together since September when the global financial crisis deepened.

Braving the global recessionary trends, India managed to grow at 6.7 per cent in 2008-09. Fitch believes there have been significant signs of stabilisation over the past three months in global credit and equity markets, as well as in consumer and investor sentiment.

It said that the world economy has likely stopped contracting and would start a slow recovery in the second half of 2009.

"The global economy has stopped shrinking and will slowly begin to recover during second half of the year. However, economic recovery will be anaemic and unemployment will continue to rise through most of next year...," Fitch said.

According to the agency, the world's major central banks are not expected to begin raising policy interest rates until late 2010 at the earliest.

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