New Delhi: India’s economic growth will slow down to 8% in 2008, as higher interest rates would dampen credit demand and take some steam out of consumer spending, international rating agency Moody’s said today.
Although fundamentals remain strong and its prospects upbeat after an impressive pace in 2007, the growth in India’s domestically-driven economy would moderate in 2008 as domestic demand eases and exports cool, according to Moody’s Economy.com, a subsidiary of the global credit rating agency.
“Real GDP growth is expected to moderate to 8% in 2008 from an estimated 8.8% in 2007 as tighter monetary conditions dampen demand for credit and take some steam out of consumer spending,” Moody’s Economy.com’s Asia Pacific Economics Director Ruth Stroppiana said in an outlook report on India.
India’s development hurdles include “poor infrastructure and archaic labour laws”, which deters development of the large scale manufacturing needed to boost employment.
The pace of activity in India has been on the upside through 2007, with GDP growth estimated to have grown well above potential for the third straight year.
“A combination of strong demand and solid export growth in recent years has helped India achieve near record growth rates around 9 per cent placing it among the fastest growing economies in the world,” Stroppiana said.