Indian economy, inflation may surprise on the upside: Credit Suisse
The brokerage also pegged 2013-14 growth at 6.9 per cent and at 7.5 per cent for FY'15. It also has one of the highest GDP forecasts for the current fiscal at 5.7 per cent.
"We expect GDP growth to surprise on the upside and inflation on the downside in 2013. The latter should in turn prompt the RBI to cut policy rates more than generally anticipated, while even the twin deficits could narrow somewhat. India is entering a cyclical sweet spot and the FY14 budget is going to be tighter than generally anticipated," Credit Suisse research analyst Robert Prior-Wandesforde said in a note.
If at all the RBI goes for more-than-expected rate cuts through 2013, it does not see growth clipping beyond 7.5 per cent in FY'14, he added.
The brokerage said headline inflation readings will fall significantly to 6 per cent while core inflation will fall steeply to under 4 per cent by mid-2013.
The optimism is based primarily on the recent 4 point improvement in the manufacturing PMI (Purchasing Managers Index) and a marginal rise in the services PMI in November.
"It seems that the fundamentals are beginning to become more helpful. In our view, the economy has yet to feel the full benefits of the rupee's sizable depreciation, while the drop in market interest rates,
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