Moody’s puts India growth in 2018,2019 at 7.5%

• The Indian economy is expected to grow by around 7.5% in 2018 and 2019 as it is largely resilient to external pressure like those from higher oil prices, Moody’s Investors Service said.

• In its Global Macro Outlook for 2018-19, Moody’s said the run-up in energy prices over the last few months will raise headline inflation temporarily but the growth story remains intact as it is supported by strong urban and rural demand and improved industrial activity.

• Moody’s put G-20 growth at 3.3 percent in 2018 and 3.1 percent in 2019. The advanced economies will grow 2.3 percent in 2018 and 2 per cent in 2019, while G-20 emerging markets will remain the growth drivers at 5.1 percent in both 2018 and 2019.

• Moody’s had in May cut India’s 2018 growth forecast to 7.3% from the previous estimate of 7.5%, saying the economy is in cyclical recovery but higher oil prices and tighter financial conditions will weigh on the pace of acceleration. Today, in the graphic accompanying the outlook, it put 2018 growth at 7.3% and 7.5% for 2019. But in the text, it put the growth ‘around 7.5%’ for both the years.

• The Indian economy grew by 7.7 percent in the first quarter or 2018. Growth is supported by strong urban and rural demand and improved industrial activity.

• While robust activity is shown in the industrial sector, a normal monsoon together with the increase in the minimum support prices for Kharif crops should support rural demand. Thus, despite external headwinds from higher oil prices and tightening financing conditions, growth prospects for the remainder of the year remain in line with the economy’s potential.

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