India well placed, but not immune to global shocks: Moody’s poll

India well placed, but not immune to global shocks: Moody’s poll

Around 35 percent saw external shocks as the greatest challenge facing India’s economy, up from just 10 percent in the previous poll in May 2015. However, this is more likely a reflection of the broad-based spike in global risk aversion rather than India’s relative vulnerabilities, said the Moody’s release

Moneycontrol Bureau India’s GDP could grow 6.5-7.5 percent over the next 12-18 months, according to over three quarters of the market participants polled by rating agency Moody’s last week.

Market participants are increasingly concerned about the potential spillover of external risks, such as interest rate tightening in the US and China’s ongoing slowdown, on India’s growth story, the Moody’s poll.

“35 percent saw external shocks as the greatest challenge facing India’s economy, up from just 10 percent in our previous poll in May 2015. However, this is more likely a reflection of the broad-based spike in global risk aversion rather than India’s relative vulnerabilities,” said the Moody’s release.

It added that most investors still regard the country as much better placed than most of its similarly rated emerging market peers.

On the banking sector, the audience was split on whether government initiatives would help to improve the asset quality of Indian banks.

“40 percent expect a reduction in weak assets in the coming 12 to 18 months, compared with 45 percent that believe asset quality is unlikely to improve. However, there was a clear consensus on the underperformance of public sector banks, with 89% expecting single digit loan growth for these entities due to capital constraints,” the Moody’s release said.

 

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