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India’s growth to slow to 7.3% in 2019: Moody’s
Why is it in the news ?
- According to the Moody’s Investors Service, Indian economy will expand 7.4% in 2018, but the growth will slow down to 7.3% in the next year.
- It is due to domestic demand tapers on higher borrowing cost due to rising interest rates.
Background
- Findings of the Moody's report titled ‘Global Macro Outlook 2019-20:
- The economy grew 7.9 per cent in the first half (January-June) of 2018, which reflects post demonetisation base effect.
- Since borrowing costs have already increased on higher interest rates, it expects the RBI will continue to steadily raise the benchmark rate through 2019, which will further dampen domestic demand.
- At its monetary policy review last month, the RBI maintained status quo on the benchmark interest rate - Repo rate.
- However, RBI had changed the monetary policy stance to ‘calibrated tightening’ from ‘neutral’.
- RBI had warned that volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation.
- Global economic growth will slow in 2019 and 2020 to a little under 2.9% from an estimated 3.3% in 2018 and 2017.
About Moody's
- Moody's is a global rating agency.
- Moody's Corporation is the holding company that owns:
1. Moody's Investor Services, which rates fixed income debt securities.
2. Moody's Analytics, which provides software and research for economic analysis and risk management.
- Moody's assigns ratings on the basis of assessed risk and the borrower's ability to make interest payments, and its ratings are closely watched by many investors.
- Moody's ratings go from AAA, which is the highest grade for the top quality issuer with the lowest risk down to C, which is usually given to securities that are in default with little chance of the principal being repaid.
Source
Indian Express.