Citi sees '04-06 corporate earnings growth at 17%

Citigroup said Indian corporate earnings growth would be at a "healthy" 17 per cent during 2004-06 "" despite being lower than the 22-23 per cent average growth seen in the last three years.

Citigroup has also revised its 2004 forecast for India's gross domestic product (GDP) to 5.4 per cent from 6.6 per cent because of the lacklustre monsoon. At the same time, it expects Asian economies to grow at 6-8 per cent.

The GDP forecast for the Asian region stands at 6.7 per cent for financial year 2004-05, against 3.7 per cent for the US and 2 per cent for Euroland.

Citigroup expects India's growth to pick up in early 2005 on the back of growth drivers like retail lending, infrastructure and outsourcing. Rising oil prices and the monsoon continue to be areas of concern for the global financial conglomerate.

"We are still bullish on India, but we see some slow down due to commodity prices in the short term," said Vineet K Vohra, vice president (regional director) investment business (Asia Pacific) Citibank NA.

However, he was quick to add that the long term growth looked bullish largely on the back of exports. At a time when global interest rates are seen to be firming up, Citigroup sees Indian rates rising by about 100 basis points.

"This will however, not retard the pace of growth," said Vohra, referring to the overall Asian region.