“Indian Economic Activity Will Accelerate in The Second Half”— Fitch

Fitch’s Global Economic Outlook (GEO) report is an example of lies being spread by some economists and politicians who claimed that India’s GDP will face further downfall.


International ratings agency Fitch put India’s growth forecast to 6.9% for the second quarter of 2017–18. Implementation of the revolutionary system of GST had lowered the growth rate to 5.7% in the June end quarter.

Fitch’s Global Economic Outlook (GEO) report downgraded the forecast from 7.4% to to 6.9% after it noted that the economic activity “may have been disrupted” in 2Q17 due to firms running down inventory ahead of the implementation of the Goods and Services Tax (GST) in July.

“In light of the poor 1H17 outturns, we have downgraded our forecast for FY17–18 (year-ending March 2018) to 6.9 percent, a cut of 0.5pp compared to the June GEO (Global Economic Outlook),” the ratings agency said in a report.

But the good news (or the bad news for some) is that Indian economy has again buckled up and ready to sprint. “(Economic) activity should accelerate in the second half of the year, as the impact of one-off events (including the demonetisation shock in late 2016 and the GST in July), which have dampened growth in the short term, are expected to wane.”

The growth, it said, will revive from increasing consumption. “Motorcycle sales — a good indicator of rural household consumption — have gained strong momentum, bouncing back in July and August after having fallen sharply in 1H17.”

“Investment is also expected to tick up in the quarters ahead, in part bolstered by ramped-up public sector infrastructure spending. The large stock of non-performing loans on bank balance sheets could, however, dampen the outlook for credit growth and business investment.”