India will clock the highest growth rate among the G20 nations in 2015-16, at 7-7.5 per cent, Moody’s Investors Service said in a report published on Wednesday, adding that the country is less exposed to external shocks than its peers.
“We forecast strong growth in India of around 7-7.5 per cent in 2015-16, the highest among the G20 economies, which is supported by lower oil prices that will reinforce gradual growth-enhancing reforms,” the report said.
“India is less exposed to external shocks than the other sovereigns discussed here (Turkey, Brazil, South Africa, and Indonesia). The positive outlook on its Baa3 rating reflects our view that the relatively resilient growth and the policy reform momentum will slowly stabilise inflation, improve the regulatory environment, increase infrastructure investment and lower government debt ratios,” it said.
The main external risks facing emerging markets at present are prolonged risk aversion due to hopes of a normalisation of the U.S. monetary policy and the chance of China’s slowdown progressing at a sharper rate than predicted.
In this regard, India has performed well, the rating agency said. Mentioning India’s monetary tightening in 2013, the report said that this was an “example of effective macroeconomic management that restored macroeconomic stability, albeit at the expense of near-term growth”.
The report concludes that the stage is now set for monetary loosening, which has already commenced in 2015, due to various factors coming together such as regulatory reforms, lower inflation and healthy current account deficit outcomes.
