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GDP Growth Projection for Asia, 2018
June 21 2018, 12:23 | Alonzo Simpson
India clocks 7.7 per cent GDP growth for Q4FY18
Growth for Asia's third-largest economy, reported by the Ministry of Statistics, trumped forecasts in a Reuters poll for annual growth of 7.3 per cent. GDP had grown at a revised 7 per cent in October-December quarter. However, for the fiscal year that ended March 31, India's growth rate works out to 6.7 per cent, down from 7.1 per cent in 2016-17.
India's GDP growth rate of 7.7 percent, recorded in the fourth quarter of 2017-2018, shows that the country's economy was on an uptrend, said president of Federation of Indian Chambers of Commerce and Industry (FICCI) Rashesh Shah on Friday. For the whole year 2017-18, the growth rate declined to 6.7 percent compared to 7.1 percent last year. GVA (ex-agriculture and government services) eased to 7.2% from 7.4%, reflecting softness in some of the private services (trade and financial services).
Construction activity jumped to 11.5 percent during January-March, after a 3.9 percent drop in the year-ago period. "On balance, GDP and GVA growth are expected to improve to 7.1% and 7.0%, respectively, in FY2019, from 6.7% and 6.5%, respectively, in FY2018".
The 9.0% growth of capital goods and the expansion in the GoI's capital spending in January-February 2018 are likely to have contributed to the healthy expansion of gross fixed capital formation (GFCF) in the just-concluded quarter. The Q1 GDP data should give the monetary policy committee enough comfort (on growth) to focus on upside inflation risks.
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Consumption, which accounts for almost 70 per cent of the US$2.5 trillion (RM9.95 trillion) economy likely remained firm, supporting economic growth as reflected in the higher sales of consumer durables and vehicles. However, the quarterly growth showed significant improvement over the previous quarters.
"Global oil prices will affect inflation and thereby challenge the central bank to hike interest rates", said Datar, referring to next month's monetary policy meeting of the Reserve Bank of India.
"While Indian economy is in cyclical recovery led by both investment and consumption, however, higher oil prices and tighter financial conditions will weigh on the pace of acceleration", Assocham secretary general D S Rawat said. Possibly, the biggest risk could be rising crude oil prices, which this month hit $80 a barrel, their highest since 2014.
"We have cut our FY19 GDP forecast by 20 basis points taking into account rising oil prices and potential global trade wars", said Teresa John, economist, Nirmal Bang Institutional Equities in Mumbai.