India Q3 GDP has green shoots – investment rises

December 1, 2017

NEW DELHI - The Indian economy accelerated to 6.3% YoY in Q3 2017 from 5.7% in Q2,with investment finally picking up to 4.7% YoY, probably due to capital goods. However, private consumption remained subdued and even decelerated to 6.5% YoY, likely due to the lingering impact of the GST reform. 

Global asset manager Natixis is predicting that the RBI will keep rates on hold to support green shoots of growth.

Inflation eased in 2017 on the back of a stronger currency, weak oil prices and a lacklustre economy, but will likely pickup in 2018, Natixis says.

“Our Natixis Monetary Condition Index shows that India has the tightest condition in Asia, driven by high real interest rates. As growth stages a recovery, we expect the RBI to hold rate to support growth throughout 2018.

“The 2018 outlook is much brighter. Moody’s raised India’s sovereign rating to Baa2 from Baa3, recognising India’s recent progress on reforms and the enhanced growth outlook. Investment and consumption will likely improve, especially as the shock of demonetisation and the tax regime reform fades.

“Looking into 2018, the economy should further benefit from favourable demographic transitions and the fruit of the reforms taken thus far. We expect growth to improve to 6.5% in 2018 from 6.0% in 2017. (ATI).