Indian economy expands 7.7 pc in Q4, 6.7 pc in FY18

Indian economy expands 7.7 pc in Q4, 6.7 pc in FY18

Indian economy expands 7.7 pc in Q4, 6.7 pc in FY18

"The GDP numbers for 2017-18 marginally overshoots the advance estimates of GDP released earlier this year".

NEW DELHI, May 31 (Reuters) - The Indian economy grew 7.7 percent year-on-year in January-March, its quickest pace in almost two years driven by higher growth in manufacturing, the farm sector and construction.

The data, combined with April's higher annual inflation pace of 4.58 per cent, could put pressure on the Reserve Bank of India to raise interest rates next week after keeping them on hold for a fourth straight meeting last month.

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However, a botched implementation of the GST almost scuttled India's growth prospects in the near term.

The latest round of FICCI's Economic Outlook Survey conducted by economists from industry, banking and financial service sector, said that the brewing trade tensions between the United States and China and protectionist measures by some leading economies may hit the Indian exporters, particularly MSME exporters, in the coming months.

Industry chamber Assocham said the GDP estimates in March quarter are in line with the expectations and indicates significant growth recovery.

GDP growth in 2018-19 could get a boost from prospects of good monsoon, potentially brightening the outlook for agricultural output. However, higher oil prices and tighter financial conditions will weigh on the pace of acceleration.

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For oil-importing India, the combination of a weaker currency and surging oil prices is a threat not only for the current-account deficit, but also inflation.

Domestic prices of petrol and diesel are near all-time highs, putting pressure on the government to bring down taxes on the fuels.

Higher crude oil prices have already hurt the rupee, which slumped to near a record low this month.

"There are some bad bugs in the form of rising oil prices, higher bond yields and lingering non-performing asset issues, affecting the overall sentiment related to the Indian economy". The advanced economies will grow at a moderate 2.3 per cent in 2018 and 2.0 per cent in 2019, while G-20 emerging markets will remain the growth drivers, at 5.2 per cent in both 2018 and 2019, down from 5.3 per cent in 2017.

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"Domestic dynamics are very strong and external volatility won't derail the current economic recovery", noted Hugo Erken at Rabobank, one of the most accurate forecasters on India GDP, and whose view is that growth reached 7.7 percent on a normal basis, well above the 7.3 percent median. For the full financial year, however, the growth rate of 6.7 per cent is a four-year low.

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