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  Business   Economy  16 May 2017  India's GDP growth to rise to 7.9 pc by Dec'17: Report

India's GDP growth to rise to 7.9 pc by Dec'17: Report

PTI
Published : May 16, 2017, 11:54 am IST
Updated : May 16, 2017, 11:54 am IST

Economy will be driven mostly by favourable external demand, improving corporate balance sheets.

GDP stands for Gross Domestic Product.
 GDP stands for Gross Domestic Product.

New Delhi: The Indian economy is entering a "productive growth phase" and real GDP growth is likely to rise to 7.9 per cent by December driven by favourable external demand, improving corporate balance sheets and private capex
recovery, says a report.

Productive growth phase is characterised as a period of improving growth while macro stability remains in check and typically sets the stage for a sustained growth cycle. According to the research note by Morgan Stanley, growth is likely to inflect higher, accelerating by almost 1 per cent point over the next three quarters.

 

Morgan Stanley expects growth to pick up from the second quarter of this year onwards and accelerate by almost a full percentage point to 7.9 per cent by December 2017 from the current run rate of 7 per cent.

"We think that the growth cycle will inflect higher, starting from second quarter of 2017, supported by three factors -- external demand environment will be favourable for growth; corporate balance sheet repair is already underway and private capex recovery will be underway by 2018," Morgan Stanley said in a research note.

The report further said implementation of GST is unlikely to create a meaningful roadblock in the growth trajectory. "Indeed, from a medium term perspective, the
implementation of GST should lead to efficiency gains through better allocation of factors of production. Estimates suggest that medium term gains to GDP growth could be to the tune of 50 bps," the report noted.

The stock market has, however, not fully priced in the coming growth cycle, and thus is expected to trend upwards, it said. "The market has not fully priced in the coming growth cycle and, thus, bears upside. The best exposure to this is
via financials and discretionary stocks," Morgan Stanley said.

Tags: indian economy, manufacturing pmi, services sector, core sector, gross domestic product
Location: India, Delhi, New Delhi