Global rating agency Standard and Poor today lowered its GDP forecast for India to 5.5 per cent from 6.5 per cent projected earlier, for current fiscal (2012-13), citing weak monsoon and volatile global economic situation as reasons.
“Lack of monsoon rains has affected India, for which agriculture still forms a substantial part of the economy.
Additionally, the more cautious investor sentiment globally has seen potential investors become more critical of India’s policy and infrastructure shortcomings which was recently highlighted by the power outage in early August that affected 20 of India’s 28 states,” S&P said in a report titled ‘Asia-Pacific feels the pressure of ongoing global economic uncertainty’.
According to the data released by the government, the growth rate in the first quarter (April-June) has slipped to 5.5 per cent from 8 per cent in the same period last fiscal.
In the Report the ratings agency cut gross domestic product (GDP) growth forecast for all major Asian economies.
It said Asia Pacific economies are witnessing cautious growth conditions and any worsening of the economic conditions in the euro-zone will increase contagion risk for the region as these economies are ‘sensitive’ to capital flows and trade.
“A trifecta featuring a slowdown in China, ongoing troubles in the Eurozone, and a weaker recovery in the US leads us to forecast slower economic growth rates for Asia Pacific,” the report added.
S&P has lowered the base case forecasts of 2012 real GDP growth by about half a percentage point for some countries, with China’s revised to 7.5 per cent (from 8 per cent); Japan to 2 per cent (from 2.5 per cent); Korea to 2.5 per cent (from 3 per cent); Singapore to 2.1 per cent (from 2.5 per cent); and Taiwan to 1.9 per cent (from 2.5 per cent).