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Morgan Stanley cuts India's 2016 GDP estimate to 7.5%
16
Mar '16
Global financial services firm Morgan Stanley has scaled down its growth forecast for India for 2016 to 7.5 per cent from 7.9 per cent previously. It noted that the country's economy is expected to see tepid recovery mainly due to external factors.

Morgan Stanley said that though the domestic macro environment has been improving steadily in the last two years, the pace of recovery has been slower than anticipated, reined in by weak external demand conditions

“We are revising down our growth estimate for 2016 to 7.5 per cent from 7.9 per cent previously and for 2017 to 7.7 per cent from 8 per cent,” Morgan Stanley said in a research note.

Despite the downward revision, the global brokerage firm said there is a slow recovery in growth driven by domestic factors.

“We expect the recovery in growth to be driven by domestic drivers – urban consumption and a revival in public capex. We expect the rise in foreign investment inflows to support the revival in capex further,” the report noted.

The report said the country's macro stability conditions are likely to remain in check with a low chance of “overheating”. It expects the current account deficit (CAD) and inflation to remain moderate.

While external demand conditions continue to be slow, Indian exports have been contracting (in value terms) over the last 14 months, with a broad-based decline in commodity and non-commodity exports. Services exports have followed a similar trajectory, with growth slowing to 0.4 per cent in 2015 from 5.1 per cent in 2014.

It said the recovery in private sector capex has been tepid, with a muted rise in projects under implementation in 2015. (SH)

Fibre2Fashion News Desk – India

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