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Fitch Ratings says rising crude oil prices a drag on India's economy

Updated : September 27, 2018 08:31 PM IST

Credit rating agency, Fitch Ratings, on Thursday said rising crude oil prices is a drag on India's economy and in the medium-term it will come down.

In an interview to CNBC-TV18, Brian Coulton, chief economist, said, "We were positively surprised by the Q2 GDP numbers. In some ways, India is more resilient than a lot of the other countries, which are being caught up in this emerging market turmoil recently."

According to Coulton, India can't sustain 8.2 percent growth, "I think growth will slow from here, partly because of the financial conditions have been tightening, the Reserve Bank of India (RBI) has been raising rates faster than we expected."

“We have got growth in these couple of years easing back to about 7.25 percent. It would still place India as the fastest growing large economy. So, very impressive numbers, no doubt about it,” he added.

“I think what has happened, as the Fed has become more confident in raising rates and has been signalling that to the market, there has been an increased focus by market players and investors on countries with imbalances, with current account deficits that needs to be financed. So, even though India’s deficit is pretty smaller than what it was back in the days of the taper tantrum, the fact that it has the twin deficit has brought it under the spotlight,” said Coulton.
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