Fitch revises India outlook to ‘Stable’, cuts GDP forecast to 7.8% for 2022-23

Fitch Ratings on Friday revised its outlook on India’s long-term foreign currency Issuer Default Rating (IDR) to “Stable” from “Negative,” citing diminished downside risks to medium-term growth.

The ratings agency said risks to the country’s medium-term growth lessened due to rapid economic recovery and easing financial sector weakness, despite near-term headwinds from the global commodity price shock.

“High nominal GDP growth has facilitated a near-term reduction in the debt-to-GDP ratio,” Fitch said in a statement.

Fitch lowered India’s economic growth for 2022/23 to 7.8% from the 8.5% it had forecast in March, saying the inflationary impacts of the global commodity price shock were dampening some of the positive growth momentum.

However, Fitch’s projection was ahead of Reserve Bank of India’s projection of 7.2%.

In 2021/22, India’s economic growth was 8.7%.

Fitch kept its rating of BBB- on India.