The Indian economy is expected to grow 7.5 per cent this financial year, a tad lower than the median estimate of 7.6 per cent as the economic fundamentals of the country continue to lag, says a Deutsche Bank report.
According to the global financial services major, growth indicators such as PMI, industrial production, non-oil-non-gold imports, have either remained flat or recorded a sequential slowdown in April-June compared to the January-March levels, while inflation pressure has increased considerably in the second quarter of this year.
As per the latest results of the survey of professional forecasters released by the Reserve Bank, the median expectation for growth (gross value added in real terms) is 7.6 per cent and 7.8 per cent for this fiscal and 2017-18 respectively.
Since the survey was conducted in May this year, the forecasts do not incorporate the likely downward revisions to growth post Brexit. Deutsche Bank’s growth forecast for this fiscal is 7.5 per cent, which is a tad lower than the median estimate of 7.6 per cent.
For 2017-18, the report said “we have reduced our growth forecast post Brexit from 7.8 per cent to 7.6 per cent, factoring in increased uncertainty and weaker global growth in the medium term.”
The direct impact from Brexit is unlikely to be material for India. But if it leads to prolonged uncertainty and lower global growth, as is expected, then India’s growth should also get affected on the margin, it said.
The IMF, which released its latest World Economic Outlook forecasts post Brexit has indeed revised down India’s growth projection to 7.4 per cent for this and next fiscal, factoring in the likely impact of Brexit and a sluggish investment recovery.
Indian economy grew 7.9 per cent in March quarter and recorded a five-year high growth rate of 7.6 per cent for the 2015-16 fiscal on robust manufacturing growth.