Tuesday July 17, 2018
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Greek debt crisis: Fitch, S&P downgrade rating for 4 national banks

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By NewsGram Staff Writer

Fitch Ratings, one of the internationally recognized statistical agencies downgraded the ratings on four major Greek banks to “restricted default” on Monday.

The decision comes after the government ordered commercial banks to close for a week and established capital controls.

The four banks hit by the downgrade, already rated as CCC or “highly speculative”, were National Bank of Greece, Piraeus Bank, Eurobank Ergasias and Alpha Bank.

According to Fitch, the capital controls, including restrictions on withdrawals by customers, amounted to a restricted default “because the deposit restrictions affect a material part of the banks’ primary obligations.”

The banks’ “viability ratings” — which weigh the banks’ intrinsic creditworthiness — were also downgraded to a bottom-level “f” or “fail”.

“The ratings reflect exceptionally high levels of credit risk, because of the imposition of capital controls as well as poor recovery prospects in the event of the default on senior debt obligations,” said Fitch.

The banks are dependent on the European Central Bank for liquidity and the ECB decision on Sunday not to increase the liquidity due to government action reflects Fitch’s view that “these banks have failed and would have defaulted had capital controls not been imposed”.

Standard & Poor’s Ratings Services also lowered its sovereign rating on Greece to ‘CCC minus’ from ‘CCC’, saying the probability of Greece exiting the eurozone was now about 50 per cent.

Meanwhile, Greece’s Prime Minister Alexis Tsipras made a reference that his country would not make a key debt payment due to the International Monetary Fund (IMF) on Tuesday.

“(How) is it possible the creditors are waiting for the IMF payment while our banks are being suffocated?” he asked during an interview on ERT television on the eve of the payment deadline.

“Once they decide to stop the suffocation, they will be paid”, the Prime Minister further responded.

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At 7.4%, India Will be the Fastest Growing Major Economy in 2018

"The current account deficit in fiscal year 2017-18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows," the report said.

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However, it added a note of caution:
Indian Economy is growing at the rate of 7.4%, Pixabay

The International Monetary Fund (IMF) reaffirmed on Wednesday that India will be the fastest growing major economy in 2018, with a growth rate of 7.4 per cent that rises to 7.8 per cent in 2019 with medium-term prospects remaining positive.

The IMF’s Asia and Pacific Regional Economic Outlook report said that India was recovering from the effects of demonetisation and the introduction of the Goods and Services Tax and “the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption.”

Medium-term consumer price index inflation “is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting banda of four per cent with a plus or minus two per cent change, the report said.

However, it added a note of caution: “In India, given increased inflation pressure, monetary policy should maintain a tightening bias.”

The International Monetary Fund (IMF) reaffirmed on Wednesday that India will be the fastest growing major economy in 2018, with a growth rate of 7.4 per cent that rises to 7.8 per cent in 2019 with medium-term prospects remaining positive.
IMF declares Indian economy growth fastest among all, IANS

It said the consumer price increase in 2017 was 3.6 per cent and projected it to be five per cent in 2018 and 2019.

“The current account deficit in fiscal year 2017-18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows,” the report said.

After India, Bangladesh is projected to be the fastest-growing economy in South Asia with growth rates of seven per cent for 2018 and 2019; Sri Lanka is projected to grow at four per cent in 2018 and 4.5 in 2019, and Nepal five per cent in 2018 and four per cent in next. (Pakistan, which is grouped with the Middle East, is not covered in the Asia report.)

Overall, the report said that Asia continues to be both the fastest-growing region in the world and the main engine of the world’s economy.

The region contributes more than 60 per cent of global growth and three-quarters of this comes from India and China, which is expected to grow 6.6 per cent in 2018 and 6.4 per cent in 2019, it said.

The report said that US President Donald Trump’s fiscal stimulus is expected to support Asia’s exports and investment.

The Asian region’s growth rate was expected to be 5.6 per cent for 2018 and 2019.

However, in the medium term the report said that “downside risks dominate” for the region and these include a tightening of global financial conditions, a shift toward protectionist policies, and an increase in geopolitical tensions.

Also Read: Hero Cycles to Grow 60% by 2022 and UK Will Help It 

Because of these uncertainties the IMF urged the countries in the region to follow conservative policies “aimed at building buffers and increasing resilience” and push ahead with structural reforms.

“While mobile payments are expanding sharply in such economies as Bangladesh, India, and the Philippines, on average Asia is lagging sub-Saharan Africa,” the IMF said, adding that the region should take steps to ensure it is able to reap the full benefits of increasing digitalisation in the global economy. (IANS)