India-China growth gap narrowing down: Fitch Ratings group MD
While the resurgent consumption in the US remains a huge growth driver, Euro markets still remain outside the recovery zone.
By ET Bureau |
CHENNAI: Rating agency, Fitch Ratings feels this year’s global recovery " looks more secure". While the resurgent consumption in the US remains a huge growth driver, Euro markets still remain outside the recovery zone. The emerging markets are supporting the overall world growth.
Fitch Ratings Group MD, Corporate ratings, Richard Hunter told media in Chennai on Monday, " After the big crisis, emerging markets are lot more resilient than the developed ones". He said GDP growth rate for 2010 for India has been now revised to 8% from 7% forecast in December 2009.
For China, it has been marginally revised to 9.5 % while it is five per cent plus for Brazil. It is retained at four per cent for Russia. Between India and China , the gap in growth rate is narrowing down, he pointed out. In China, Government’s strong policy measures are aiding growth. But, inflation and constraints to private sector investment are coming in the way of high growth rate.
Among the major advanced economies, GDP growth in 2010 for the US has been raised from 2.5% in December to 3%, Japan from one per cent to close to two per cent and for Australia from 2.5 to 3 per cent. It has remained at zero for Eurozone and the UK.
Mr Hunter said the consumer spending can grow in line with GDP growth from 2011. But, the challenge will be to sustain the growth in the US, Japan and emerging economies beyond 2010 when the fiscal stimulus is withdrawn.
Among the risks are while US consumers have started dissaving and spending, Eurozone consumers are over saving. Supply of credit is a greater constraint on growth. For corporate ratings, the three major determining factors will be the conditions in the bond market, liquidity in the banking system and over all country risk.
Fitch Ratings India Senior director, Sreeninvasa Prasanna said earlier the rating agency had limited opportunity in India because of its focus on large corporates. But, the market has increased following the implementation of Basel norms which have stipulated mandatory rating for all bank loans above Rs 10 crore. The number of entities available for rating has gone up from 500 in 2005 to 10,000 now.
Fitch Ratings Group MD, Corporate ratings, Richard Hunter told media in Chennai on Monday, " After the big crisis, emerging markets are lot more resilient than the developed ones". He said GDP growth rate for 2010 for India has been now revised to 8% from 7% forecast in December 2009.
For China, it has been marginally revised to 9.5 % while it is five per cent plus for Brazil. It is retained at four per cent for Russia. Between India and China , the gap in growth rate is narrowing down, he pointed out. In China, Government’s strong policy measures are aiding growth. But, inflation and constraints to private sector investment are coming in the way of high growth rate.
Among the major advanced economies, GDP growth in 2010 for the US has been raised from 2.5% in December to 3%, Japan from one per cent to close to two per cent and for Australia from 2.5 to 3 per cent. It has remained at zero for Eurozone and the UK.
Mr Hunter said the consumer spending can grow in line with GDP growth from 2011. But, the challenge will be to sustain the growth in the US, Japan and emerging economies beyond 2010 when the fiscal stimulus is withdrawn.
Among the risks are while US consumers have started dissaving and spending, Eurozone consumers are over saving. Supply of credit is a greater constraint on growth. For corporate ratings, the three major determining factors will be the conditions in the bond market, liquidity in the banking system and over all country risk.
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Mr Hunter said India’s growth is supported by a strong industrial recovery across all sectors and the services sector including IT and ITES. " We see a big opportunity for Fitch in India because of its size and growth potential. It will be expanding its team for research, rating and marketing".Fitch Ratings India Senior director, Sreeninvasa Prasanna said earlier the rating agency had limited opportunity in India because of its focus on large corporates. But, the market has increased following the implementation of Basel norms which have stipulated mandatory rating for all bank loans above Rs 10 crore. The number of entities available for rating has gone up from 500 in 2005 to 10,000 now.
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