HSBC, Morgan Stanley cut India’s 2013-14 growth forecasts
13 Mar 2013
Morgan Stanley and HSBC have both cut their Indian economic growth forecasts for 2013-14 to 6.0 per cent from 6.2 per cent to reflect lower-than-expected growth in the October-December quarter.
HSBC says it expects 50 basis points of additional rate cuts in the calendar year 2013, and "a slightly more protracted recovery" in India.
Morgan Stanley says domestic and external environment still remain "challenging," but notes that an improving growth in the agriculture sector, a slight pick-up in export growth and more stable private capital expenditure could help improve economic growth.
"While GDP growth bottomed out in (the) quarter ending December 2012 and will gradually pick up, we now expect the recovery to be stretched out marginally as compared to our earlier expectations," Morgan Stanley said.
"We believe that an improvement in agriculture GDP growth (low base in 2012), a slight pick-up in export growth that also supports manufacturing and trade services, and stabilisation of private capex at low levels will help to improve overall GDP growth in fiscal 2014," it said.
Since the credit crisis, the bad growth mix (high fiscal deficit and low investment growth) has been causing a steady deceleration in potential growth and has led to macro stability risks, the investment bank noted.
