Global ratings agency Standard & Poor’s (S&P), which had earlier threatened to downgrade India to junk status, on Monday lowered its 2012-13 GDP growth forecast for the country to 5.5%, citing weak monsoons and investor sentiments.
S&P’s move comes within a week after the Centre announced reform measures including foreign direct investment in multi-brand retail, aviation, broadcasting and power exchanges.
The rating agency said that the continuing uncertainty in the euro zone and a weak US affected most Asia Pacific countries.
“The lack of monsoon 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,” S&P’s credit analyst Andrew Palmer said in a report titled Asia Pacific Feels the Pressure of Ongoing Global Economic Uncertainty.
“We need not get worried about this projection, growth will now pick up with the reform measures announced during the last few days and more measures are expected,” Chandrajit Banerjee, director-general, Confederation of Indian Industry, told HT.
S&P also lowered China’s GDP growth projection to 7.5% from 8% projected earlier. It also lowered growth projections for Japan, Korea, Singapore and Taiwan by half a percentage point each to 2%, 2.5%, 2.1% 1.9% respectively.