The Indian economy is expected to witness an average GDP growth of 7.3 per cent over 2020-22, says a Morgan Stanley research report. According to the global financial services major, the structural growth story in India remains strong from a medium term perspective. “The uptick in the private capex cycle, which we anticipate will begin in 2018, will ensure that the economy enters into a sustained and productive growth cycle,” Morgan Stanley said in a research note, adding that over 2020-22, it expects the economy to post an average GDP growth of 7.3 per cent. Moreover, the overall policy mix will also remain supportive of a further improvement in productivity, which will help keep macro stability risks limited, it added. The global brokerage expects recovery in private capital spending in 2018 which will aid in overall economic recovery. Moreover, corporate returns expectations and balance sheet fundamentals are also improving, and a strengthening financial system will be able to meet investment credit demand.
“This sets the stage for a fully fledged recovery in 2018, and we expect real GDP growth to accelerate from 6.4 per cent in 2017 to 7.5 per cent in 2018 and further to 7.7 per cent in 2019,” it said. On prices, the report said the cyclical growth recovery and normalising food prices are expected to drive a pick-up in headline inflation. “Against the backdrop of a better macro outlook, we expect the RBI to hike in the second half of fiscal year 2019,” it added. The Reserve Bank in its fifth bi-monthly review of this fiscal kept the repo rate unchanged at 6 per cent and reverse repo at 5.75 per cent while raising the inflation forecast for the remainder of 2017-18 to 4.3-4.7 per cent.
Source: Financial Express