India likely to clock GDP growth of 6.9% this FY, says report
Real GDP growth slowed substantially to 6.1% year-on-year in the fourth quarter of 2016-17
Press Trust of India | New Delhi July 7, 2017 Last Updated at 01:32 IST
Indian economy is expected to recover in the coming quarters and the country is expected to clock a real gross domestic product (GDP) growth of 6.9 per cent in this financial year, says a report.
According to a report by BMI Research, the country’s growth is expected to pick up following the negative ramifications from the
demonetisation drive in November 2016, but weak public banks will likely cap the recovery.
Real
GDP growth slowed substantially to 6.1 per cent year-on-year in the fourth quarter of 2016-17.
“We expect the economy to continue to recover over the coming quarters. We are forecasting real
GDP growth to come in at 6.9 per cent in 2017-18,” the report said.
The Fitch Group company, noted that the negative effects from the
demonetisation measure is already wearing off, and the
Indian economy will likely benefit from positive demographic trends, greater external stability (due to improved terms of trade from low
oil prices), and continued reforms that should help to improve the country’s admittedly poor business environment.
The report, however, noted that the public banking sector is still weak and plagued with mounting non-performing assets, and it is likely to weigh on India’s growth potential.
“Despite the Reserve Bank of India’s efforts to clean up these bad loans, these will likely take some time to be worked through the system, and therefore, credit allocation to the productive sectors of the economy is likely to be negatively affected,” the report said.
Meanwhile, economic growth in North Asia is expected to slow over the course of 2017 and 2018, driven by structural slowdown in China, poor policy mix in Japan, and policy uncertainty in South Korea, the report said.
“That said, The Association of Southeast Asian Nations (Asean) and
India will likely continue to be the bright spots in the region due to positive demographics and improvements in their business environments,” it added.
