India’s GDP to slow to 7.2% this year: E&Y

2011-10-24 15:18:47

India's GDP in this calendar year will slow down to 7.2 per cent, says Ernst & Young's first Rapid Growth Markets forecast released today.  But a modest recovery to 8 per cent is expected next year.

Interestingly, the forecast from E&Y predicts that India will overtake China in 2014.  In that year India is expected to grow at 9 per cent while China is expected to grow at 8.6 per cent. 

Both India and China are expected to be relatively less impacted among the 25 Rapid Growth Markets (RGMs) in case of a deterioration of the Eurozone debt crisis.  They would be able to withstand a likely slowdown due to the large size of their domestic markets and the beneficial effects of lower oil and commodity prices, according to the report.

Overall outlook for India positive

“While the overall outlook for India is positive, the country will need to address rising inflation which rose to 10.9 per cent in August 2011,” says the forecast.  It adds, “Provided India’s inflation does start to fall back by the end of this year, and the US and EU economies do not slip back into recession, the “soft patch” for Indian growth should be relatively short-lived. Once inflation is in check, and interest rates are no longer rising, consumers will be more willing to spend, supporting a general improvement in the business environment, with growth steadily accelerating during 2012.”

Says Farokh Balsara, Partner & India Markets Leader, Ernst & Young India, “India’s consumption-led economy continues to make the country a highly attractive investment destination in the short to medium term. Its domestic demand-driven growth model has helped the country weather the volatility in the global markets, providing significant growth opportunities to businesses.”