Fitch raises India's GDP growth forecast, cuts China's

New Delhi: Global credit rating agency Fitch on Monday raised its forecast for India's gross domestic product (GDP) mid-term growth by 0.7 per cent to 6.2 per cent from 5.5 per cent earlier, while cutting its estimate for China’s growth by 0.7 per cent.

The rating agency reduced its estimate for 10 emerging economies to 4 per cent from 4.3 per cent earlier.

"The reduction is mainly due to a large reduction of 0.7 percentage points to the estimate of China's supply-side growth potential," Fitch said in its report "Emerging-Market Potential Growth Weakens as China Slows". China's mid-term growth forecast has been cut to 4.6 per cent from 5.3 per cent earlier.

"However, we have made large upgrades to India and Mexico, with the latter benefiting from a much better outlook for the capital-to-labour ratio. India's estimate is higher at 6.2 per cent from 5.5 per cent and Mexico's at 2 per cent from 1.4 per cent," it added.

The forecast for Russia has been cut to 0.8 per cent from 1.6 per cent, for Korea to 2.1 per cent from 2.3 per cent, and for South Africa to 1 per cent from 1.2 per cent.

The agency also said the latest estimates remain below its pre-pandemic potential growth projections for all the top 10 emerging markets (EM10), except Brazil and Poland.

"This reflects deteriorating demographic trends and the legacy of disruptions from the pandemic. The latter is partly reflected through revisions to projections for capital stock and productivity growth," it said.

"But some 'scarring' effects are hard to capture and we have now made additional downward 'level shock' adjustments to historical estimates of potential GDP in 2020 and 2021 for Mexico, Indonesia, India, and South Africa," the report added.