Macroeconomic Forecast India

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India posted growth of 5.8% y-o-y in both Q408 and Q109, which brought full-year growth in FY2008/09 (April-March) to 6.7%, the weakest reading since FY2002/03, but still to be considered relatively healthy in the current environment. We now acknowledge upside risks to our 5.0% GDP growth forecast for FY2009/10 due to expectations of a more conducive government policy improving sentiment, but caution that weak global growth will weigh on capital inflows and investment.