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India’s GDP growth may rise to 7.5% this fiscal: Report

via Business Line: India’s economic growth momentum is likely to pick up further in the April-June period and the country is expected to clock GDP growth of 7.5 per cent in this financial year, says a Morgan Stanley report.

According to the global financial services major, the growth recovery will remain robust, supported initially by consumption and exports. In the January-March quarter, India’s gross domestic product (GDP) grew at the fastest pace in seven quarters at 7.7 per cent on a robust performance by the manufacturing and service sectors, as well as good farm output.

“In aggregate, we expect GDP growth to pick up to 7.5 per cent in this financial year as against 6.7 per cent in 2017-18,” Morgan Stanley said in a research note. According to Morgan Stanley, the macro-stability indicators of the economy such as inflation and the current account deficit are likely to stay in check.

The report forecasts Consumer Price Index (CPI) inflation to remain slightly above the inflation target of 4 per cent and the current account deficit below 2.5 per cent of GDP.

On inflation, the report said upside risks could emerge from a weak monsoon and the implementation of minimum support price hikes. High frequency indicators point towards a further pick-up of growth in the April-June period, though the strength is reflected more in demand indicators as compared to the production side, the report said.

The report, however, noted that the risks to this growth outlook could stem from slower global growth or a rise in trade tensions impacting external demand. Moreover, a sustained, sharp rise in oil prices, a further rise in US rates and persistent US dollar strength, a delay in pick-up of private investment and an adverse impact from a weak monsoon could impact the country’s growth momentum.

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