Fitch Lowers India GDP Forecast, Raises Turkey’s Growth

Fitch Ratings has lowered India›s economic growth forecast for the current fiscal to 6.9% from 7.4% after the gross domestic product growth «unexpectedly faltered» in the April-June quarter.

The credit rating agency said however that it expects the economic activity to accelerate in the second half of the fiscal year with the waning impact of one-off events including the demonetization shock in late 2016 and the GST rollout in July, which had dampened growth in the short term, PTI reported.

«The large stock of non-performing loans on bank balance sheets could, however, dampen the outlook for credit growth and business investment,» Fitch Ratings in its latest Global Economic Outlook said.

The Asian Development Bank had last month slashed India›s GDP growth forecast for the current fiscal to 7% from 7.4% owing to weakness in private consumption, manufacturing output and business investment. India had posted a 7.1% growth in 2016-17.

ADB penciled in 7.4% for 2018-19, down from the earlier forecast of 7.6% in July.

Fitch Ratings said the global economy has improved markedly this year and is on course to recording its fastest expansion since 2010.

India›s gross domestic product growth at 5.7% in the first quarter (April-June), down from 6.1% in the previous year, is «the lowest outturn since early 2013, and GDP has now been cooling for five consecutive quarters», it said.

 Turkey

Fitch also forecast that Turkey›s third quarter growth will exceed 7%, citing the positive impact of the government incentive packages, Anadolu Agency reported.

Besides its prediction for the third quarter growth, the agency revised up its 2017 GDP growth rate to 5.5% from 4.7% while stating that the Turkish economy will expand 4.1% in 2018 and 2019. The 2018 forecast significantly lower than the 5.5 goal set by the Medium Term Program announced last week.

The GEO September 2017 read, «The second quarter growth also surpassed Fitch expectations with a 5.1% growth. The performance is continuously supported by the temporary fiscal measures and various government support packages including Credit Guarantee Fund,» referring to the supportive role of the strengthening eurozone economy.

Fitch Ratings also noted that the agency predicts a slowdown in the last quarter as a large portion of the funds offered as part of the CGF was distributed and most of the fiscal measures will terminate by the end of the year. Accordingly, the agency keeps 2018 and 2019 growth rates at 4.1%.