カントリーリスクレポート - インド
India Country Risk Report Q4 2019
|発行||Fitch Solutions, Inc.||商品コード||203079|
|出版日||ページ情報||英文 75 Pages
India's real GDP growth printed its lowest reading in five years at 5.8% y-o-y in Q4 FY2018/19 (April - March), slowing from 6.6% y-o-y in the previous quarter, due to a larger drag from net exports, a collapse in gross fixed capital formation growth, and slower private consumption growth. This brought the full year growth to 6.8%. At Fitch Solutions, we expect a gradual rebound in domestic demand on the back of receding political uncertainty following the 2019 Lower House elections to lift the headline growth print over FY2019/20. We are maintaining our forecast for growth in FY2019/20 to come in at 6.8%, unchanged from FY2018/19. Risks to our forecast are evenly balanced.
The Reserve Bank of India (RBI) cut its policy repurchase (repo) and reverse repo rates by 25bps to 5.75% and 5.50%, respectively, at its June 6 monetary policy meeting. We at Fitch Solutions now see scope for an additional 25bps worth of easing from the RBI by end-FY2019/20 (April - March), which would take the repo and reverse repo rates to 5.50% and 5.25%, respectively. Subdued inflation and an increasingly uncertain economic growth environment inform our view for further easing.
We at Fitch Solutions maintain our view for India's central government fiscal deficit to come in at 3.6% in FY2019/20, wider than the government's 3.4% estimate during its interim Union Budget in February. Both upside pressure to fiscal spending and downside pressure to revenue collection inform our view for a mild fiscal slippage in FY2019/20. That said, we will be reviewing our forecasts after the release of the full FY2019/20 Union Budget on July 5. We expect the Indian rupee to weaken slightly over the near term as the central bank will likely continued to favour a pro-growth stance over the coming months. Indian rupee gains are likely to be capped by foreign exchange market interventions by the central bank to support export competitiveness, while further interest rate cuts narrow interest rate differentials with the US and exert weakening pressure on the currency. Over the longer term, while an expensive rupee, higher inflation in India relative to the US, and periods of risk-off sentiment should exert some downside pressure on the unit, an increasingly dovish US Fed rhetoric should put a floor to rupee weakness against the greenback. Accordingly, we at Fitch Solutions are revising our forecasts slightly for the rupee to average INR70.50/USD in 2019 and INR72.00/USD in 2020, from INR71.50/USD and INR73.00/USD previously.
Prime Minister Narendra Modi's BJP-led NDA swept the 2019 India Lower House elections, with the NDA garnering an absolute majority of 350 seats in the 545-member Lower House. At Fitch Solutions, we believe this is the best possible outcome from an investment perspective over the coming five years given the implied policy continuity and likely continued progress of economic reforms. That said, risks to watch over the coming quarters include rising religious tensions, the NDA government's approach to US-India trade negotiations, and any renewed tensions with neighbouring Pakistan.
Downside Risks To Growth: We expect slowing global economic growth to pose headwinds to India's 'Make in India' campaign through slower foreign direct invest- ments growth in the manufacturing sector. Additionally, there is also the risk of banking sector asset quality worsening following the central bank's revision to its stress asset resolution framework in June 2019, which appears to show a softer stance towards the resolution of non-performing loans in the sector. A high load of non-performing loans on bank balance sheets will reduce monetary policy transmission as banks, with a high level of risk on their books, would be unwilling to lower their lending interest rates in line with policy interest rates. Poor monetary policy transmission could see growth underperform our expectations. India Country Risk Q4 2019fitchsolutions.com