Despite Demonetisation, India’s GDP Growth Will Be Better Than China’s: Fitch Ratings

While there are many facets to India's demonetisation measure, making it difficult to predict the impact on real gross domestic product (GDP) growth, the growth will still be higher than China's in the medium term, said Fitch Ratings.

In a statement, the credit rating agency said it expects India's GDP growth trend higher than China's in the medium term. "In India we expect GDP growth to accelerate in FY2018 on the back of reform implementation, monetary easing of the past year and infrastructure spending, while in China a continued increase in leverage in the broader economy is more and more becoming a burden for growth," Thomas Rookmaaker, Director in Fitch's Asia-Pacific Sovereigns Group said.

"In China, we forecast real GDP growth of 6.4 per cent in 2017, down from a projected 6.7 per cent in 2016, due to the impact of recent macro-prudential tightening measures targeting the housing market," he said. In October 2016, Fitch forecast 7.4 per cent growth for the current fiscal for India. Fitch also added that the growth would accelerate to 8 per cent only by 2018-2019, on account of a lagged impact of monetary easing.