MOSL: ECOSCOPE-Fiscal spending boosts EAI growth in March 2018-Estimate 4QFY18 real GDP growth at 7.6%
ECOSCOPE: Fiscal spending boosts EAI growth in March 2018; Estimate 4QFY18 real GDP growth at 7.6%
- After averaging 7% YoY in January-February 2018, India’s economic activity index (EAI) grew at a 53-month high of 13.8% YoY in March 2018, implying ~10% YoY growth in 4QFY18, better than in the past few quarters.
- Better EAI in March 2018 was primarily supported by more than doubling of core fiscal spending, due to which consumption activity grew 17.5% YoY, the highest pace since 2009.
- Further, March 2018 was the fifth consecutive month of double-digit growth in investments. Strong industrial auto sales and construction activity supported 8-year high growth of 14.3% in investments in 4QFY18.
- Overall, a favorable base supported EAI growth in March 2018. We expect real GDP growth to increase from 7.2% in 3QFY18 to 7.6% in 4QFY18, better than 7.3% projected earlier, implying 6.7% growth in FY18 as against 7.1% in FY17.
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