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6 September 2017
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Growth (The Total Investment & Insurance Solutions)
Economic
activity in the country lost some pace amid GST related disruptions but
underlying growth momentum remains strong and the country may clock 6.7 percent
growth this fiscal, says a Morgan Stanley report.
India's economic growth slipped to a
three-year low of 5.7 percent in April-June, underscoring the disruptions
caused by uncertainty related to the GST rollout amid slowdown in manufacturing
activities.
Commenting on the GDP numbers, Morgan Stanley
said, "We are inclined not to read this as a sign of general slowdown in
aggregate demand".
"Indeed,
we remain skeptical that the GDP statistics are fully reflecting the underlying
growth trends in the economy," Morgan Stanley said in a research note. The Total Investment & Insurance
Solutions
It further said that a number of high
frequency growth indicators are indicating that end demand is holding up well
and is running counter to the slowdown exhibited in the national accounts. The Total Investment & Insurance
Solutions
However, on account of the weak GDP print in
June 2017 quarter, Morgan Stanley has made some mark-to-market adjustments to
its full year GDP growth estimates. The
Total Investment & Insurance Solutions
"We believe that June 2017 likely marked
the trough in growth in this cycle and we expect GDP growth to accelerate by
almost 200 bps to 7.5 percent year-on-year in March 2018 quarter," it
said. The Total Investment &
Insurance Solutions
On a calendar year basis, Morgan Stanley now
project growth of 6.4 per cent and 7.4 percent in 2017 and 2018, respectively,
as against 7.6 percent and 8.0 percent previously. The Total Investment & Insurance Solutions
The revised new financial 2018 and fiscal
2019 growth estimates are at 6.7 percent and 7.5 percent, respectively. The Total Investment & Insurance
Solutions
According to Morgan Stanley, currency
replacement programme and GST had led to a deceleration in growth momentum.
"However, considering that these events are
already in the rear view mirror, we expect the underlying economic growth
momentum to reassert themselves, leading to a re-acceleration in growth,"
it said.
"In our view, India is moving on to the
next phase of the business cycle of productive growth - a phase marked by
further improvement in growth while macro stability remains in check. This will
also set the stage for a sustained growth cycle," it added.The Total Investment & Insurance
Solutions
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