S&P Revises India’s GDP Forecast to 7.9 Per Cent

Global rating agency Standard & Poor's Ratings Services revised India’s GDP forecast upwards at 7.9 per cent for the fiscal year ending March 2016 driven by rising investment and low oil prices.

However, the forecast of real GDP growth in the Asia Pacific region has been lowered.

“India should be the Asia-Pacific region's bright spot. We revised our growth forecasts for the country upward, reflecting new official data based on methodological improvements. Standard & Poor's now forecasts GDP growth at 7.9% in the fiscal year ending March 2016, versus 6.2 per cent earlier, and 8.2 per cent in fiscal 2017, from 6.6 per cent previously. Rising investment and low oil prices have been boosting India's growth,” said Paul Gruenwald, Asia-Pacific Chief Economist at S&P.

S&P has lowered its GDP growth forecasts for China, Japan, and the Asian Tiger economies, as per its report titled ‘Stronger US economy and lower oil prices aren't boosting Asia-Pacific growth’.

The twin factors of strengthening US economy and lower oil prices have yet to lift economic data in much of Asia-Pacific. Central banks have shifted their stance in recent months, with a critical group of monetary policy makers cutting rates or easing financial conditions and the remainder moving to a more neutral stance.

This is contrary to what we observed until the latter part of 2014. Weaker growth in China and Japan may be weighing on overall sentiment, although India's star is rising.

S&P trimmed GDP growth forecasts for China to 6.9 per cent this year and 6.6 per cent in 2016, from 7.1 per cent and 6.7 per cent, respectively. It believes the official growth target will be about 7 per cent.

For Japan, the agency has lowered our growth forecast to 0.7% this year (from 1.3%) and 1.3% in 2016 (2.1% previously).