Economic growth in India firming up, says OECD

The Dollar Business Bureau Close to Moody’s Investors Services affirming the Government of India’s credit rating outlook to ‘positive’ from ‘stable’, the Organisation for Economic Co-operation and Development (OECD)’s said that its Composite Leading Indicators (CLIs) for India indicate firming growth. Turning points of CLIs tend to precede turning points in economic activity relative to trend by approximately six months, point to strengthening of growth momentum in the euro area too. A release by OECD said that In Italy and France, the signs of a positive change in momentum, which were assessed as tentative in March, have now been confirmed while the CLI for Germany continues to point to positive change in Momentum. The outlook is for stable growth momentum in the OECD area as a whole as well as for the United States, the United Kingdom and Japan. On the other hand, CLIs signal growth easing in China and Canada, albeit from relatively high levels. In Brazil and Russia, CLIs point to a loss in growth momentum. On Thursday, Moody’s Investors Service has affirmed the Government of India’s credit rating outlook to ‘positive’ from ‘stable’. Moody’s decision to revise the ratings is based on its view that there is an increasing probability that actions by policy makers will enhance the country’s economic strength and, in turn, the sovereign’s financial strength over coming years. India has grown faster than similarly rated peers over the last decade due to favourable demographics, economic diversity, as well as high savings and investment rates. Moody’s expects these structural advantages, supported by relatively benign global commodity prices and liquidity conditions, will keep India’s growth higher than that of its peers over the rating horizon. The rating outlook would be revised to stable if economic, fiscal and institutional strengthening appeared unlikely, or banking system metrics remained weak or balance of payments risks rose, the Moody’s report added.    

This article was published on April 10, 2015.