India Economic Forecast

India Economic Outlook

May 22, 2018

The economic recovery that took hold in Q3 of FY 2017, the last quarter for which GDP data is available, appears to have continued through early FY 2018, which began in April. Business activity in the manufacturing and service sectors increased in April compared to the previous month, after also registering gains in Q4 of FY 2017. Stronger demand led to increased orders for companies in both sectors, helping to drive the improvement. Moreover, in early April, India’s international reserves hit an all-time high of USD 426 billion. However, in the same month, the merchandise trade deficit remained stubbornly large, and the cost of long-term government debt reached a two-year high. The higher cost of government debt suggests that investors are beginning to doubt that official fiscal targets, which include bringing the deficit down to 3.0% of GDP by March 2021, can be achieved.

India Economic Growth

A normalization in cash conditions following the demonetization of late 2016 and the fading of disruptions from last year’s launch of the Goods and Services Tax should facilitate the economic recovery this year. A FY 2018 budget skewed to benefit rural incomes should also boost private consumption. Nonetheless, risks of fiscal slippage and concerns over India’s banking sector cloud prospects. Our panel expects GDP growth of 7.3% in FY 2018, which is unchanged from last month’s estimate, and 7.4% in FY 2019.

India Economy Data

20132014201520162017
Population (million)1,2591,2761,2921,3091,327
GDP per capita (USD)1,4771,5971,6111,729-  
GDP (USD bn)1,8602,0382,0822,264-  
Economic Growth (GDP, annual variation in %)6.57.28.07.1-  
Consumption (annual variation in %)7.46.86.18.7-  
Investment (annual variation in %)1.84.16.62.4-  
Industrial Production (annual variation in %)-0.12.83.45.0-  
Public Debt (% of GDP)68.568.669.669.5-  
Money (annual variation in %)12.311.711.56.3-  
Inflation Rate (CPI, annual variation in %, eop)8.25.34.83.9-  
Inflation Rate (CPI, annual variation in %)11.05.94.94.5-  
Inflation (PPI, annual variation in %)6.02.0-3.61.8-  
Policy Interest Rate (%)8.007.506.756.25-  
Stock Market (annual variation in %)18.924.9-9.416.9-  
Exchange Rate (vs USD)60.0262.2966.2564.86-  
Exchange Rate (vs USD, aop)60.4261.1465.4267.04-  
Current Account (% of GDP)-1.8-1.4-1.1-0.7-  
Current Account Balance (USD bn)-32.8-27.6-22.1-15.2-  
Trade Balance (USD billion)-136.6-137.5-117.8-115.7-  
Exports (USD billion)314311262275-  
Imports (USD billion)451448380380-  
Exports (annual variation in %)4.6-1.2-15.74.9-  
Imports (annual variation in %)-8.0-0.6-15.30.2-  
International Reserves (USD)304341356373-  
External Debt (% of GDP)24.023.323.3-  -  

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India Facts

ValueChangeDate
Bond Yield7.81-0.04 %May 21
Bond Yield7.81-0.04 %May 21
Exchange Rate68.11-0.09 %May 21
Exchange Rate68.11-0.09 %May 21
Stock Market34,616-0.08 %May 21
Stock Market34,616-0.08 %May 21

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