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India’s Real GDP Growth to Slow

India’s Real GDP Growth to Slow India’s Real GDP Growth to Slow

The pace of India’s real GDP growth is likely to come down to 6.5% in the current financial year on the likely impact of demonetization, while muted inflation might open room for additional rate cuts, a Deutsche Bank report said, PTI reported. Economic growth will see a moderation in the near term and will gradually recover to 7.5% in the next financial year, the global financial services major said. “We expect growth to be impacted adversely in the present and next quarters due to the government’s temporary de-monetization initiative,” said the note, adding that GDP will moderate to 6.5% in 2016-17, and gradually recover to 7.5% in FY 2017-18. According to the report, the government might increase public spending from next year to offset the likely lingering impact of a slower growth in the informal economy. The Reserve Bank of India is also likely to keep monetary policy accommodative for a prolonged period, which will help private consumption to recover once again in the next year, especially in the second half.

 

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