Credit Suisse reduces GDP forecast to 9.4 pc

The Global financial services firm has also lowered its forecast for 2008-09 to 9.6 per cent from 10.50 per cent earlier, reports MC Vaijayanthi.

Global financial services firm Credit Suisse has cut its GDP forecast for India to 9.4 per cent for 2007-08 from 10 per cent predicted in February. The firm has also lowered its forecast for 2008-09 to 9.6 per cent from 10.50 per cent earlier.

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The Reserve Bank of India forecasted the economy will grow by around 8.5 per cent in 2007-08, and the Prime Minister's Economic Advisory Council said on Monday it saw growth at 9 per cent.

The firm expects a recovery in consumer spending in the second half of the year and an improvement in consumption estimates to underpin the GDP growth. “I believe concerns regarding consumer spending have been overdone,” Sailesh Jha, senior economist at Credit Suisse said. The slowdown in consumer spend is limited to cars, motorcycles, residential property, while the outlook remains bright for durables and consumer staples, he added.

Jha also anticipated a 100 basis points hike in the cash reserve ratio (CRR) and a 50 basis points hike in repo rates.