India’s Gross Domestic Product growth is on its way to recovery after slowing down because of the Goods and Services Tax, a Morgan Stanley report said. The international financial services firm has forecast a 6.7% growth for the 2017-18 financial year, PTI reported.
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.”
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.