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MOSL: ECOSCOPE: India’s economic activity growth at 6-month high in May 2018-Weak private consumption offset by external trade

ECOSCOPE: India’s economic activity growth at 6-month high in May 2018; Weak private consumption offset by external trade

 

• After averaging 7% YoY in the first four months of 2018, India's economic activity index (EAI) grew at a 6-month high of 8.3% YoY in May 2018, implying continued high-growth momentum in 1QFY19.
• Better EAI growth in May 2018 was largely on account of external trade, which added to economic activity, since real exports grew faster than real imports. Further, higher fiscal spending offset the weakness in private consumption.
• Investments grew at double digits for the 7th consecutive month, supported by favorable base. Strong industrial auto sales and an expected double-digit growth in IIP for capital goods were the primary drivers of investments growth.
• Overall, leading economic activity indicators continue to point towards another strong quarter. We expect real GDP growth to stay strong at 7.5-8% in 1QFY19 as against 7.7% in 4QFY18.