Ratings agency Standard & Poor’s (S&P) has forecast a gross domestic product (GDP) growth of between 5.8 and 6.3 per cent in 2009 and 6.8 and 7.3 per cent in 2010 on the back of very strong domestic consumption.
“Domestic demand has been held up by stable rural demand and the hike in public sector salaries,” said Subir Gokarn, chief economist, Asia Pacific, S&P while giving the agency’s mid-year outlook.
“Domestic policy responses, both fiscal and monetary have helped in shoring up this demand even though exports reduced drastically,” he said.
“China, India and Indonesia would be three countries that would be posting a decent positive growth in 2009 also,” said Gokarn. However, he was quick to point out that the Indian growth story could face hurdles in the form of revival of inflation, interest rate pressures and a persistent global sluggishness.
“Even though the wholesale price inflation has remained benign, we forecast the consumer price index at slightly over 6 per cent, with the difference being attributed partly to food prices that would continue to remain under pressure due to a low rainfall,” he said .