Fitch raises its forecast for India GDP growth, reducing China's economic growth
Global credit rating agency Fitch raised its forecast for India's gross domestic product (GDP) mid-term growth by 0.7 percent to 6.2 percent from 5.5 percent earlier while cutting its estimate for China’s growth by 0.7 percent. The rating agency reduced its estimate for ten emerging economies to 4 percent from 4.3 percent 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 "Emerging-Market Potential Growth Weakens as China Slows". China's mid-term growth forecast has been cut to 4.6 percent from 5.3 percent earlier.
"However, we have made large upgrades to India and Mexico, with the latter benefiting from a much better outlook for the capital-to-labor ratio. India's estimate is higher at 6.2 percent from 5.5 percent and Mexico's at 2 percent from 1.4 percent", The forecast for Russia has been cut to 0.8 percent from 1.6 percent, for Korea to 2.1 percent from 2.3 percent, and for South Africa to 1 percent from 1.2 percent. 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", "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".
