Strong import growth in June points to continued recovery in India’s domestic demand and indicates that economic expansion will accelerate from the April-June quarter, says a Morgan Stanley report.

According to global financial services major, exports growth weakened sequentially for the fourth consecutive month — but imports growth remained strong, pointing towards robust domestic demand. Growth in exports, it said, averaged 10.2 per cent year-on-year, moderating from the 18.3 per cent pace of growth registered in the March quarter.

Total growth in imports however stayed strong at 19 per cent year-on-year in June. While oil imports and gold and silver imports growth dipped on a month-on-month basis, non-oil, non-gold imports continued to post strong double-digit growth during June.

“Imports growth data has remained strong, indicating a robust pickup in domestic demand. This has been corroborated by other high-frequency growth indicators, reinforcing our view that growth will accelerate from second quarter of 2017 onwards,” Morgan Stanley said in a research note.

The report further noted that non-oil, non-gold imports held up well, growing at 17.2 per cent year-on-year in June versus 18 per cent in May. “Non-oil non-gold imports growth (a proxy for domestic demand) continued to post strong double-digit growth, 17.2 per cent YoY in June as compared to 18 per cent YoY in May,” the report said.