Growth to rebound to 7.5% in FY19: report
Team Udayavani, Feb 13, 2018, 11:50 AM IST
New Delhi: India’s economy will accelerate to 7.5% in 2018-19 and there is a slim chance of the much-feared rate hike by the central bank in the near-term as inflation risks abate, says a report.
The economic momentum in the current financial year was affected by temporary disruptions on account of demonetisation and GST implementation but a rebound in the next financial year is likely, the Deutsche Bank report said on Monday.
“We remain optimistic about a growth rebound in FY19. We are currently forecasting 7.5% y-o-y real GDP growth for FY19,” it said.
It further noted that the next few months will be critical to assess the shape of growth recovery, direction of global oil prices, forecast of summer monsoon, the extent of increases in minimum support prices, and the degree of volatility in global financial market markets.
Under Deutsche Bank’s base case scenario, policy rates are likely to remain steady at 6% through 2018, which would help the growth recovery to gain traction and sustain in the quarters ahead.
“The central bank is not willing to jump into a rate hike cycle in a hurry, unless inflation risks rise materially from current levels,” it said, adding that the Reserve Bank of India will stay on hold for a longer period.
“However, if the RBI embarks on a premature rate hike cycle, then growth could turn out to be lower than currently anticipated,” it added.
Growth bottomed in April-June 2017 (5.7%) and has started stabilising since July-September 2017 (6.3%), albeit at a modest pace.
As per the report, growth momentum is expected to accelerate further in the December and the March quarters, as reflected in the uptick in leading high frequency indicators such as PMI, industrial production, core infrastructure production and exports.
“Prospect of higher global oil prices, a negative monsoon outcome and stagnation in global growth recovery remain key risks to our baseline forecast of growth improving to 7.5% in FY19,” the report noted.
The brokerage said the headline inflation will cool down to 5% for January from 5.2% in December and will cool down further from July onwards on a lower base.
On the impact of a wider fiscal deficit number, it said the RBI “seems to be giving a lower weight at this stage to the potential inflationary risks that could arise due to fiscal slippages”.
Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.
Top News
Related Articles More
Sensex, Nifty fall for 2nd day on FII selling; RIL, ICICI Bank major drag
Sensex, Nifty fall over 1 pc, snap two-day rally ahead of US Fed interest rate decision
SC orders liquidation of grounded air carrier Jet Airways’ assets
Home-cooked meals become dearer in October on costlier vegetables
Sensex, Nifty surge over 1 pc on heavy buying in IT stocks as Trump set to win US polls
MUST WATCH
Latest Additions
Unauthorized bus stops at signals fuel traffic woes and safety concerns
No greater feeling than serving those in need: Outgoing CJI D Y Chandrachud
Baikampady: Here, even elederly have to crawl under trains to cross tracks!
CJI Chandrachud: A legacy of landmark verdicts that shaped society and some controversy too
Neeraj Chopra to head to South Africa for off-season training later this month
Thanks for visiting Udayavani
You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.