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MOSL: ECOSCOPE-Economic activity growth at a four-month low in February 2018-Better March 2018 to support 4QFY18

ECOSCOPE: Economic activity growth at a four-month low in February 2018; Better March 2018 to support 4QFY18 real GDP growth

 

• After a decent growth of ~7% YoY in January 2018, India’s economic activity index (EAI) grew at four-month slow pace of 6.3% YoY in February 2018. It implies average growth of 6.6% in the first two months of 2018, similar to the growth witnessed in 3QFY18.
• Though investments grew strongly at 11.8% YoY in February 2018, the growth was the slowest in four months, which dragged EAI growth down. Consumption growth was unchanged at 5.9%, while narrower trade deficit supported EAI.
• Most of sub-components in investments – cargo traffic, power generation, capital goods imports – grew slower than in the past few months. Within consumption, weaker fuel consumption was offset by better fiscal spending in February.
• Overall, an extremely favorable base is expected to support EAI growth in March 2018. Accordingly, we continue to expect real GDP growth to improve slightly from 7.2% in 3QFY18 to 7.3% in 4QFY18, implying full-year FY18 growth of 6.7% as against 7.1% in FY17.