By Swati Bhat
MUMBAI, Dec 11 (Reuters) - India's economy is expected to grow at its slowest pace in six years in the fiscal year to March 2009 after three years of growth at or above 9 percent as the global financial crisis hits hard, a quarterly Reuters poll shows.
Growth is forecast to slow to 6.8 percent in 2008/09 and 6.2 percent in 2009/10, the poll showed, highlighting the deterioration over recent months in an economy that is largely driven by domestic activity.
In September, a similar poll had forecast growth of 7.5 percent in 2008/09 and 7.4 percent in 2009/10. The last time the economy grew less than 7.5 percent was in 2002/03, when it expanded just 3.8 percent.
The private-sector forecasts are significantly higher than those of the central bank, which cut its key interest rates on Saturday as part of a well-flagged stimulus package. It projects growth in 2008/09 at 7.5 to 8 percent.
The government also announced extra spending and other measures to shore up activity and confidence in the economy at the weekend, following signs of a sharper-than-expected slowdown and the deadly attacks on Mumbai in late November.
"We doubt they will be sufficient to quickly reverse slumping growth in investment and exports, and rising second-round effects caused by higher non-performing assets, tightening credit conditions, falling property prices and rising job losses," said Sonal Varma, economist at Nomura.
As growth slows, inflation is expected to drop sharply to 3.8 percent in 2009/10, from an average of 8.95 percent in 2008/09, the poll said.
Inflation hit 12.91 percent in early August, its highest since annual data in the current series became available in 1995, but has since dropped to seven-month lows of 8.4 percent as global commodity and energy prices have fallen.
Oil is India's biggest import, and its fall of more than $100 a barrel from July's record high above $147 a barrel is expected to ease pressure on the country's trade deficit.
The trade deficit is still expected to top $100 billion for the first time this year, but is seen holding at around $110 billion in 2009/10, about a third lower than forecast in the September poll.
The rupee hit a record low of 50.65 per dollar on Dec. 2 and is down more than 20 percent this year as India was rocked by the financial crisis.
But as the intensity of the crisis eases next year, capital outflows should slow down, allowing the rupee to recover to 48 per dollar by the end of June and to 46.25 by the end of the year, the poll found. --------------------------------------------------------------- Results of the lastest poll (percentage change over a year earlier, except trade): --------------------------------------------------------------- Respondents GDP WPI# Trade Balance
pct pct US $ bln
08/09 09/10 08/09 09/10 08/09 09/10 --------------------------------------------------------------- CRISIL 6.80 6.50 9.50 5.00 - - Standard Chartered 7.00 6.30 9.80 3.60 - - HDFC Bank 7.27 6.13 8.90 4.50 -101.74 -120.00 ABN Amro Bank 6.80 5.80 8.50 3.00 -114.00 -88.40 JPMorgan Chase 6.70 6.20 9.50 3.50 -103.80 -103.40 Bank of Baroda 5.80 5.50 6.00 4.50 -75.00 -62.00 Reliance Capital 7.30 7.20 8.70 3.00 -128.40 -133.30 Nomura 6.80 5.30 9.20 2.60 -113.10 -97.00 Kotak Mahindra Bank7.00 6.20 9.00 4.00 -106.00 -114.00 Yes Bank 6.50 6.20 8.50 4.50 -116.00 -138.00 --------------------------------------------------------------- Median 6.80 6.20 8.95 3.80 -109.55 -108.70 Average 6.80 6.13 8.76 3.82 -107.26 -107.01 --------------------------------------------------------------- #Average inflation for the fiscal year Forecast made in previous Reuters surveys:
GDP WPI TRADE BALANCE
Pct pct US$ bln
08/09 09/10 08/09 09/10 08/09 09/10 Sept 2008 7.5 7.4 10.94 6.0 -124.6 -166.3 July 2008 7.6 8.1 9.95 5.0 -124.7 -144.0 March 2008 8.1 n/a 5.55 n/a -113.1 n/a Dec 2007 8.3 n/a 4.70 n/a -101.0 n/a Sept 2007 8.0 n/a 4.90 n/a -97.2 n/a June 2007 8.2 n/a 4.90 n/a -92.4 n/a Forecasts for Indian rupee per U.S. dollar -------------------------------------------------------------- Respondents End-June 2009 End-Dec 2009 -------------------------------------------------------------- CRISIL 45.00 43.00 Standard Chartered Bank 48.25 46.00 HDFC Bank 49.50 46.50 ABN Amro Bank 50.50 47.50 JPMorgan Chase 47.50 47.00 Bank of Baroda 47.50 44.00 Reliance Capital 45.00 44.50 Nomura 48.50 46.50 Kotak Mahindra Bank 49.00 47.00 Yes Bank 47.75 45.75 -------------------------------------------------------------- Median 48.00 46.25 Average 47.85 45.78 -------------------------------------------------------------- Historical Data: --------------------------------------------------------------
GDP WPI TRADE BALANCE
Pct change Pct US$ bln -------------------------------------------------------------- 2003/04 8.5 5.4 -15.5 2004/05 7.5 6.4 -38.1 2005/06 9.4 4.4 -51.6 2006/07 9.6 5.4 -56.7 2007/08 9.0 4.7 -90.1 -------------------------------------------------------------- 5-yr Average 8.8 5.3 -50.4 -------------------------------------------------------------- (Additional reporting by Neha D'silva and Boby Michael in MUMBAI) (Editing by John Mair)