Lehman Brothers Forecasts Indian GDP to Grow at 7.3 pct in 2009

The U.S.-based investment banker Lehman Brothers forecast that India's GDP is likely to grow at the rate of 7.3 percent in the fiscal year 2009, reported Indian official news agency Press Trust of India Monday.

We forecast 7.3 percent GDP growth (current financial year). We expect fundamentals to improve next year, propelling a recovery in FY10, the agency reported, quoting a report of Lehman Brothers.

For the first quarter ended June 2008, Indian economy registered a growth of 7.9 percent against 9.2 percent in the same period last year.

According to the report, the rising cost of borrowing, higher input costs, declining consumer purchasing power and weakening external demand are expected to slow growth.

The slowdown has so far been confined to the industrial sector, but it is expected to spread to the services sector, notably the financial, real estate and IT sectors, the report said.

The investment growth rate is also likely to moderate as firms become more cautious given increasing uncertainty about the economic outlook and reduced availability of financing, it added.

Earlier this year, the Reserve Bank of India has predicted that Indian economy will grow at the rate of 8 percent in fiscal year 2009.

Source: Portnews