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MOSL: ECOSCOPE: India’s real GDP growth could touch 8% in 1QFY19; Expect growth to decelerate in subsequent quarters

ECOSCOPE: India’s real GDP growth could touch 8% in 1QFY19; Expect growth to decelerate in subsequent quarters

 

• As per our in-house economic activity index (EAI) for India, real GDP growth could post ~8% YoY growth in 1QFY19, the highest growth in 8 quarters and better than 7.7% in the previous quarter. Along with a composite EAI for GDP, we have also created a similar composite EAI for GVA. It also confirms real GVA growth of 7.7-7.8% in 1QFY19.
• Our EAI-GDP grew 9.7% YoY in June 2018, better than 8.6% in May 2018, and the highest growth in 7 months. Better EAI in June 2018 was on account of higher consumption activity - private as well as fiscal. Investment activities also improved; however, weak foreign trade partially offset higher domestic activities.
• Our EAI-GVA also grew at 3-month highest pace of 7.8% YoY in June 2018. The industrial sector was the primary driver, posting the highest growth in 5 months, while the services sector held up at 7.3% in June 2018.
• Overall, our EAI indices point that real GDP growth could be 7.8-8% in 1QFY19, better than 7.5% projected by the RBI. Although 1QFY19 will be better than expected, we also believe that growth will decelerate in the subsequent quarters of FY19, and will keep real GDP growth at sub-7% for the second consecutive year in FY19.