Fitch: Macro situation weak on slow growth, inflation

PTI Mumbai | Updated on March 12, 2018 Published on September 07, 2012

Ratings agency Fitch, which in June cut its outlook of the country’s sovereign rating to negative, on Friday said the macroeconomic situation continues to remain weak with slower growth and inflationary pressures.

“The current macroeconomic outlook looks weak, as real GDP continues to slow and inflation pressures remain strong,” the agency said in a report on sovereign ratings across the Asia-Pacific.

All the rating agencies have revised their outlook on the country in the present period of heightened economic worries and “policy paralysis”. A host of private analysts have revised downwards GDP forecast for the current fiscal to a low of 5.1 percent.

Fitch’s rival S&P had threatened to downgrade the rating to junk status, calling for immediate course-correction.

According to a recent report, the finance ministry is planning to present the country’s strengths to the rating agencies when they come calling this month, to avoid downgrade.

Fitch today said the country’s external position is a “rating strength” with reserves of over $290 billion at the end of June which will suffice for six months of external payments. “This still provides a key buffer during periods of higher global risk aversion,” it added.

Fitch also noted that acceleration in economic reforms and an improving investment climate are the upsides, while a lax fiscal policy, especially in the run-up to the 2014 general elections, is the downside risk.

Published on September 07, 2012
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