New York: International rating agency, Fitch Ratings has increased India’s medium-term potential growth forecast. The American rating agency has upgraded India’s medium-term potential growth forecast to 6.2% from 5.5%. The agency cited higher employment, larger working-age population and increased labour productivity expected during the period for this upgrade.
‘In India’s case, potential growth has increased by 0.7 percentage points to 6.2% given an improvement in the employment rate and a modest increase in the working-age population forecast. India’s labour productivity forecast is also higher. We have made large upgrades to India and Mexico, with the latter benefitting from a much better outlook for the capital to labour ratio. India’s estimate is higher at 6.2% from 5.5% and Mexico’s at 2.0% from 1.4 %,’ said Fitch.
The agency also made ‘level shock’ adjustments to historical estimates of potential GDP in 2020 and 2021 for Mexico, Indonesia, India, and South Africa, factoring in the lingering scarring effects.
Earlier in September, the agency had retained India’s growth forecast for the current fiscal. Fitch Ratings retained the growth forecast at 6.3% for current fiscal. It also forecasted 6.5% growth for the next fiscal. ‘The Indian economy continues to show resilience despite tighter monetary policy and weakness in exports, with growth outpacing other countries in the region,’ said Fitch.
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