Good news! Goldman Sachs predicts economic slowdown to end soon

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Published: December 4, 2019 3:30 AM

Goldman Sachs also believes there are some early signs of economic stabilisation. "Although credit to industry remains muted, personal loans continue to show robust growth.

Goldman Sachs explained that while the Q2FY20 print was weaker than Q1, it expects sequential growth to pick up over the course of next several quarters.

In response to better global growth, easier domestic financial conditions, positive fiscal impulse, improved sentiment and easing supply bottlenecks, the slowdown that began in January 2018 is expected to end soon, said a report released by Goldman Sachs Economics Research on Tuesday. Goldman Sachs indicated that India’s growth is likely to have troughed.

“We forecast India’s GDP growth at 5.3% and 6.6% in FY20 and FY21, respectively, lower than what we had previously projected. Confidence concerns in the domestic financial sector pose a key downside risk to our outlook,” the report said.

India’s GDP growth stood at 4.5% for the quarter-ended September, which was lowest in over six years. Goldman Sachs explained that while the Q2FY20 print was weaker than Q1, it expects sequential growth to pick up over the course of next several quarters.

One of the reasons that leads to a relatively optimistic view on India is the expectation that global growth will exhibit a pronounced sequential pick-up over the next few quarters, it said. At the same time, an upliftment in sentiment and easing supply bottlenecks are expected to contribute meaningfully to a sequential pick-up in growth, distributed across higher consumption, investment and exports.

Goldman Sachs also believes there are some early signs of economic stabilisation. “Although credit to industry remains muted, personal loans continue to show robust growth. Foreign direct investment (FDI) has increased by 23% in the first six months of FY20, and services exports continue to perform above the average for emerging economies,” the report pointed out.

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