India: GDP growth to stay above 7% in FY19 and FY20 – Standard Chartered

According to analysts at Standard Chartered, several factors are likely to push India’s GDP growth trajectory lower for the rest of FY19 (year ending March 2019).

Key Quotes

“Q1-FY19 GDP growth of 8.2% was much stronger than expected, boosted by a favourable statistical effect. As the base effect turns adverse – H2-FY18 GDP growth was 7.1%, relative to 5.8% in H1 – a moderation in quarterly headline GDP growth seems inevitable. We forecast Q2-FY19 GDP growth (due on 30 November) at 7.5%, and expect Q4 growth to slip below 7%.”

“Upcoming national elections could also lead to investment commitments being deferred until H1-FY20.”

“In addition, slower credit disbursement by non-banking financial companies (NBFCs, including housing finance companies) amid higher interest rates and tighter liquidity conditions is likely to contain economic activity. Moderating global growth is another concern for future domestic growth.”

“Despite this, we maintain that GDP growth is likely to stay above 7% in both FY19 and FY20.”