Moody’s: Growth well below potential

Rating agency Moody's today said Indian economy is expected to have grown by little more than 5.5 per cent in last quarter, and an initial spike in investor sentiment after recent reforms has faded and the "reality of India's deep-seated structural problems" has begun to set in.

The reforms proposed by the government may help reduce the key risks facing the economy but cannot lift the near-term outlook, Moody's said, while adding that the economy is growing well below its long-term potential.

It, however, said that the growth rate could be near the bottom of its current downward cycle. GDP numbers for July-September quarter is scheduled to be announced next week on November 30.

Moody's said that the growth rate for that quarter could be "a little more than 5.5 per cent year-on-year, roughly the same as in the first two quarters (of calendar 2012) but substantially below where GDP was 12 months ago."

"This underscores the economy's challenges, and it will be a while before GDP growth is back at its trend rate. Our outlook is for a steady upturn in growth across the coming quarters before growth finally hits potential by the second half of 2014," Moody's said adding that corporate sector remains the weakest pocket of the economy.

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