Below trend growth persists, green shoots visible: Deutsche Bank

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New Delhi | Published: May 1, 2016 2:28:04 PM

Worst seems to be over for the Indian economy but given the structural issues, it will take some time to return to an investment-led high growth trajectory, says a Deutsche Bank report.

Deutshe Bank“Global economic conditions however would need to be stable for India to achieve 8 per cent growth, which is a big uncertainty in today’s world,” the Deutsche report noted. (Reuters)

Worst seems to be over for the Indian economy but given the structural issues, it will take some time to return to an investment-led high growth trajectory, says a Deutsche Bank report.

According to the global financial Services major, some of the sources of chronic weakness appear to have bottomed.

“India remains on a slow and uneven recovery path and given the structural issues in the economy (like high NPAs, weak demand and corporate leverage), will take time to return to an investment-led high growth trajectory (over 8 per cent growth),” Deutsche Bank said in a research note.

The global brokerage firm said it is more optimistic about financial year 2017-18 growth prospects, as it expects the lagged impact of a likely good monsoon this year and increased consumer spending, supported by pay commission awards and lower interest rates, to filter into the economy only by next fiscal year.

Global growth uncertainty however will remain a major drag to India’s economic and market outlook.

“Global economic conditions however would need to be stable for India to achieve 8 per cent growth, which is a big uncertainty in today’s world,” the report noted.

Though production and bank credit are still reporting poor outturns, exports and auto sales appear to have turned the corner, the report said, adding that if agriculture production rises meaningfully, overall growth momentum should pick up further this year.

Meanwhile, a variety of business surveys reflect flat to still-lackluster sentiments, but just like growth indicators, the pace of worsening has clearly ebbed. Moreover, financial market-based leading indicators also suggest a modest rise in growth expectations.

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