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

Unauthorized bus stops at signals fuel traffic woes and safety concerns

SC notice to Karnataka, DK Shivakumar on CBI plea against withdrawal of consent by state govt

Will remain active in politics till my last breath: JD(S) patriarch & ex-PM Deve Gowda

BJP calls Congress govt ‘laughing stock’ as ‘samosa politics’ heats up in Himachal

Chikkaballapur: Yoga teacher feigns death by holding her breath, escapes murder bid

World Bunts Summit to be held in Mumbai on December 7

SC dismisses PIL seeking CBI probe into Tirupati laddus row

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

Gho Pooja in Deepavali Festival

Melukote Deepavali

Ganapathi Co-operative Society Ltd

Udayavani Chinnara Banna 2024

Annapoorna Aahar | Food Places In Mysore


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.