Terming ‘GST, demonetisation in rear view mirror’ , global financial services firm Morgan Stanley today said India’s Gross Domestic Product growth is on its way to recovery after slowing down because of the Goods and Services Tax and forecasted a higher 6.7% growth for the 2017-18 financial year.
Economic activity in the country lost some pace amid GST related disruptions but underlying growth momentum remains strong and the country may clock 6.7 per cent growth this fiscal, says the report.
The country’s GDP growth slowed to 5.7% in the first quarter of 2017 from 7.9% in the corresponding period last year. The April-June quarter numbers were the lowest in three years for India.
“We are inclined to not read this as a sign of general slowdown in aggregate demand,” Morgan Stanley said.
“We believe that June 2017 likely marked the trough in growth in this cycle, and we expect GDP growth to accelerate by almost 200 basis points to 7.5% year-on-year in the March 2018 quarter”, it said.
The company is clear on demonetisation and GST affecting India’s pace of growth. “However, considering that these events are already in the rear view mirror, we expect the underlying economic growth momentum to reassert themselves, leading to a re-acceleration in growth,” it said.
India is already on its way to the next phase in productive growth, Morgan Stanley said, adding that macro stability will remain in check this period.