Growth signals of Indian economy are strong after a period of weak performance in recent quarters. First quarter real GDP growth came in strong at 7.7 percent year-on-year after a 7 percent rise in the final three months of 2017. A rebound in credit growth is mirrored in reviving investment activity.
Prospects of consumer spending is likely to be underpinned by the likely normal rainfall in the southwest monsoon that would stimulate the large agricultural sector’s output and rural incomes and from employment gains that reflect strong business conditions and industrial sector momentum.
Moreover, the country’s fiscal policy stance continues to be growth-supportive with a focus on the rural economy and infrastructure. Given favourable growth traction, Indian monetary authorities estimate that the nation’s output gap has almost closed. According to a Scotiabank research report, the Indian economic growth outlook is rather encouraging on the back of improved fundamentals, implemented reforms, and favourable demographics.
“We forecast that the nation’s real GDP will grow by 7½ percent y/y over the next two years following a 6.3 percent advance in 2017”, added Scotiabank.