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MOSL: ECOSCOPE-GDP growth picks up sharply in 4QFY18; Expect sub-7% growth in FY19

ECOSCOPE: GDP growth picks up sharply in 4QFY18; Expect sub-7% growth in FY19

 

• Real GDP growth picked up from 7% in 3QFY18 (revised from 7.2% previously) to 7.7% in 4QFY18, close to our forecast of 7.6%, but much better than consensus of 7.4%.
• Consumption growth of 8.1% was the highest in the past three quarters, led by sharp 16.8% growth in government spending. Fixed investments (GFCF + change in stocks) surged 14.3% in 4QFY18, aided by a favorable base.
• Real GVA growth was at a seven-quarter high of 7.6%, exactly in line with our forecast, but much higher than consensus of +7.1%. Growth was primarily driven by the industrial sector.
• Implied national savings fell from 28.6% of GDP in FY17 to 27.7% in FY18 – the lowest level in 14 years. The investment rate picked up slightly to 30.6% of GDP in FY18 from 30.3% in FY17 on account of a wider CAD.
• Overall, real GDP grew 6.7% in FY18, the slowest pace in four years. Importantly, we expect real GDP to grow by sub-7% for the second consecutive year in FY19 due to weak fiscal spending, a wider CAD and slower growth in private investments, which will be offset by higher private consumption growth.