Another wave of growth forecast cut is on for India. After rating agency Standard Poor’s, it is the turn of Credit Suisse.
The brokerage has cut GDP forecast for India for the current fiscal to 6 percent from the earlier 6.5 percent. S&P has forecast the growth at 5.5 percent.
The revisions come at a time when the government has shown a resolve to push through a few hard reform decisions, risking even its political future.
However, the brokerage expects the government to get a pat on the back for its reform initiatives from none other than the Reserve Bank of India, a key detractor of its fiscal profligacy, when the central bank cuts rates on 30 October.
“We continue to expect another 125 bp of repo rate cuts by the end of the current fiscal year, with a 50 bp reduction on 30 October by way of a pat on the government’s back following its recently announced reform measures,” it said in its note.
“Given the lags with which monetary policy operates, the monetary easing will have a bigger impact on 2014/15 GDP growth than 2013/14,” said Credit Suisse, which believes January-March was the bottom of the economic cycle.
It has also cut GDP projections for China to 7.5% for 2012, from 7.7% previously and to 7.5% for 2013 from 7.9% before.
“We continue not to see much risk of a hard-landing, nor a strong rebound in the foreseeable future. While the rebound in property transactions and resilient consumption should prevent a recession, the lack of private investment remains the centre of our pessimism for a growth recovery,” it said on China.