Global investment banks such as CLSA, Credit Suisse are of the view that the growth is likely to remain robust around 6.75-7% in FY19 but there is also a possibility that GDP growth could well disappoint consensus expectations.
The Indian economy gave a positive surprise as it grew at a rate of 7.2 percent in October-December 2017, and will likely expand 6.6 percent in 2017-18, latest official estimates said on Wednesday.
Commenting on the recent economic data released post market hours on Wednesday, global investment banks such as CLSA, Credit Suisse are of the view that the growth is likely to remain robust around 6.75-7% in FY19 but there is also a possibility that GDP growth could well disappoint consensus expectations.
The economy is poised to move into a faster lane, swiftly recovering from the disorderly effects of demonetisation and the goods and services tax (GST), said a report.
The rebound in India’s “real” inflation-adjusted gross domestic product (GDP) growth from 6.5 percent in the previous quarter (July-September) will likely help regain its lost status as the world’s fastest-growing major economy outpacing China, which grew 6.8 percent in October-December 2017, it said.
The CSO also estimated that gross value added (GVA), which is GDP minus net taxes, grew 6.7 percent in October-December from 6.2 percent in the previous quarter and 6.9 percent in the same quarter of 2016-17.
GVA is set to grow at 6.4 percent in 2017-18 from 7.1 percent in 2016-17. It is a more realistic guide to measure changes in the aggregate value of goods and services produced in an economy.
Here’s what global brokerage firms are recommending:
CLSA:
The December quarter GDP data delivered a small positive surprise. The GDP estimate for FY18 has been raised incrementally to 6.6 percent from 6.5 percent earlier. Our central case remains that rates will be left unchanged, said the CLSA report.
The global investment bank reduced FY18 estimate from 7 percent to 6.8 percent. The weakness in consumer spending, robust rise on imports compensate for the rise in investment. CLSA expects growth to remain around 6.75-7 percent in FY19.
Credit Suisse:
The real GDP growth rose by 70 bps to 7.2 percent on a YOY basis in Q3 which was higher than consensus expectations of 7 percent. The global investment bank maintains their belief that the recovery is underway but rise in indirect tax collections is likely exaggerated pickup.
The nominal GDP growth rose to 11.9 percent compared to 10 percent YoY basis which is broad as expected. Credit Suisse expects Q4 growth to remain strong at 7.2 percent on a YoY basis on recovery in private consumption.
The global investment bank also maintains its view that full-year GDP growth should disappoint consensus expectations.
