In an upward revision, Fitch Ratings has increased Bharat’s
medium-term potential growth forecast from 5.5 per cent to a robust 6.2 per
cent.
This positive development reflects the country’s
growing economic resilience and potential for expansion. This upgrade places Bharat
in the spotlight for its strong growth trajectory.
Additionally, Mexico received a substantial boost in
its growth estimate, with Fitch revising it from 1.4 per cent to 2.0 per cent.
These positive changes were underpinned by a more
favourable outlook for the capital-to-labour ratio.
The adjustments didn’t stop there. Fitch also revised
growth forecasts for other countries. Poland’s potential growth estimate was
increased to 3.0 per cent from 2.6 per cent, Turkey’s to 4.1 per cent from 3.9
per cent, Brazil’s to 1.7 per cent from 1.5 per cent, and Indonesia’s to 4.9
per cent from 4.7 per cent.
However, it wasn’t all good news. Fitch Ratings
simultaneously lowered the growth estimate for China from 5.3 per cent to 4.6
per cent, reflecting a significant reduction in China’s supply-side growth
potential.
Russia’s growth estimate dropped to 0.8 per cent from
1.6 per cent, Korea’s to 2.1 per cent from 2.3 per cent, and South Africa’s to
1.0 per cent from 1.2 per cent.
The overarching trend across the ten emerging markets
(EM) in Fitch’s Global Economic Outlook was a drop in potential growth, with
the GDP-weighted average falling to 4.0 per cent from the 4.3 per cent estimate
in 2021.
The bulk of this decrease can be attributed to the
substantial reduction in China’s supply-side growth potential.
Despite this, the unweighted average across the EM10
countries remained at a steady 3 per cent, thanks to upward revisions in other
markets.
Fitch acknowledges that lingering pandemic effects and
shifting demographic trends are responsible for the overall slowdown in
potential growth across EM10 countries.
The agency also made “level shock” adjustments to
historical estimates of potential GDP in 2020 and 2021 for Mexico, Indonesia,
India, and South Africa, factoring in the lingering scarring effects.
In light of these adjustments and forward-looking
growth forecasts, Fitch anticipates that the EM10 potential GDP will be 3.0
percentage points lower by 2027 compared to the trajectory based on
pre-pandemic potential growth estimates from 2019.
This reflects the challenges that emerging markets
continue to face in their pursuit of sustainable growth.
This positive revision for Bharat’s growth potential
is expected to provide a substantial boost to the nation’s economic prospects,
reinforcing its position as a promising global player in the mid-term.
ANI
