New Delhi, March 7: Global ratings agency Moody's on Thursday said India's December quarter was likely the bottom of the economic cycle, and anticipate a steady acceleration in GDP growth in the coming year. The rating agency pushed India's 2013 GDP forecast to 6.2 per cent from 5.1 per cent, and said that all the major headwinds were likely to turn into mild positives.
The rating agency said that risks around the economy, particularly the fiscal and current account deficits, have begun to recede and the gains in financial markets has started reflecting the rising expectations around the economy as well as lower risk.
Moody's expects India's headline inflation to drop to 6 per cent by year's end, paving the way for an expected rate cut around mid-2013.
Moody's said that the Budget 2013-14 delivered the easiest and smallest cuts in the deficit, enough to free up funds to help the government's 2014 electoral chances without fanning fiscal risk.
Moody's said the budget does nothing to fortify India's long-term growth. But it does suggest that government consumption, which slowed sharply in the fourth quarter, will accelerate in 2013, lifting GDP growth.
Moody's forecast economic growth of around 7% from 2014, which is India's new rate of trend growth. However, it rejects double-digit growth view and said that this is wildly optimistic and, without significant structural reform, a dangerous view to take.
India expanded at a faster rate than China in February even as emerging market economies witnessed a moderation in economic growth, an HSBC survey said today.
The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, fell from 53.8 in January to 52.3 in February. This is the lowest figure since August 2012 and indicated a moderation in economic growth in global emerging markets.
During February, the HSBC composite index for India, which maps both manufacturing and services sectors, stood at 54.8, whereas for China it was 51.4.
An index measure of above 50 indicates expansion. Among the largest economies covered, growth rates slowed in China, India and Brazil in February, but India expanded more than China.
All four BRIC economies -- Brazil, Russia, India and China -- registered slower increases in new business since January. Moreover, employment also rose at the weakest rate in three months, HSBC said.
The February EMI report suggests that there has been a softening in new orders across the BRIC economies and particularly for new export orders in manufacturing industry.
Meanwhile, business expectation for the next 12 months continue to be robust.
