Credit Suisse lowers GDP forecast to 5.3 %

Credit Suisse, on Thursday, lowered its forecast for India’s GDP growth in the current financial year to 5.3 per cent from 5.7 per cent earlier due to ‘ongoing aggressive’ fiscal tightening.

“The ongoing aggressive fiscal tightening, equivalent to more than one per cent of GDP in the current fiscal, and another likely squeeze in the order of 0.25-0.50 per cent of GDP next fiscal...This larger than previously expected fiscal tightening has, however, led us to further reduce our GDP growth forecasts for the current fiscal to 5.3 per cent and to 6.7 per cent for next fiscal,” Credit Suisse research analyst Robert Prior-Wandesforde said in a note.

Credit Suisse had earlier estimated that India’s GDP would grow at 6.9 per cent in the next financial year.

He further said that these projections were comfortably above the consensus estimates and that he continued to expect a 7.5 per cent average GDP reading for 2014-15.

The Central Statistics Office had last week pegged the GDP growth for the year at a decadal low of 5 per cent.

He also said that this would further encourage the RBI to cut lending rates and the ratings agencies to leave the sovereign rating unchanged.