Risks around the economy is receding: Moody's Analytics

Thursday, India's December quarter was likely the bottom of the economic cycle, and anticipates a steady acceleration in GDP growth in the coming year. The rating agency pushed India's 2013 GDP forecast to 6.2% from 5.1%, and said that all the major headwinds were likely to turn into mild positives, Global ratings agency Moody. The agency announced that risks around the economy, particularly the fiscal and current account deficits, have begun to recede and the gains in financial markets has started reflecting the rising expectations around the economy as well as lower risk. Moody's expects India's inflation to drop to 6 percent by year's end, paving the way for an expected rate cut around mid-2013. Budget 2013-14 delivered the easiest and smallest cuts in the deficit, enough to free up funds to help the government's 2014 electoral chances without fanning fiscal risk:, Moody. Moody's forecast economic growth of around 7% from 2014, which is India's new rate of trend growth. He rejects double-digit growth view and said that this is wildly optimistic and, without significant structural reform, a dangerous view to take. India expanded at a faster rate than China in February even as emerging market economies witnessed a moderation in economic growth, HSBC survey. The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, fell from 53.8 in January to 52.3 in February. This is the lowest figure since August 2012 and indicates a moderation in economic growth in global emerging markets. The HSBC composite index for India in February maps both manufacturing and services sectors, stood at 54.8, whereas for China it was 51.4. An index measure of above 50 indicates expansion. Business expectations for the next 12 months continue to be vigorous.