Goldman Sachs cut its growth forecast for India citing 'larger-than-expected shock' to the financial sector over the last couple of months, and its knock-on effects on both domestic and external demand.
The brokerage lowered its gross domestic product growth numbers for FY09 to 6.7 per cent from 7.5 per cent and for FY10 to 5.8 per cent from 7 per cent, Goldman said in a research note on Monday.
"We believe there is little fiscal room for additional stimulus in FY10. We expect growth to trough at a quarterly pace of 5.0 per cent in the April-June quarter of FY10, before recovering to 6.6 per cent by end-FY10. The slowdown, in our view, is very much cyclical in nature," the brokerage said.
Goldman Sachs said the gathering financial crisis over the past several weeks has affected India's financial sector significantly, with both domestic and external liquidity drying up. This has impacted the financing for corporates,