Banking services provider HSBC said that India’s GDP growth is all set to accelerate to 7.6% in the upcoming fiscal year 2019-20. The report by HSBC attributed the growth to revival of key sectors from the disruptions caused by last year’s GST implementation and note ban by the end of 2016. Despite the optimistic outlook for the coming years, the company estimated that India’s GDP is expected to grow only by 6.5% in the current year.
The report stated that India’s GDP growth is a two-part story wherein the first part will be the gradual recovery after the slowdown and the second part will be the accelerated growth that can be witnessed through the revival of key sectors. The structural reforms implemented by GST and demonetisation are expected to contribute to the country’s rapid economic growth in the upcoming years. For the next fiscal year (2018-19), HSBC estimates the economic growth to be at 7.0%.
Among the global financial agencies, HSBC has always been optimistic about India’s GDP growth for the upcoming years. A few months ago, the banking services provider released a report stating that India will be the third largest economy in the world by 2028. The report stated that India will soon overtake Germany and Japan to become the third largest economy in the world.
Inflation and fuel price hike are among the other factors that are likely to have a major impact on the economy. Once the effects of GST and demonetisation wane off, inflation is expected to stabilise and remain under control as per the report. The company expects inflation to average at the rate of 3.4% for the year 2018.
Many rating agencies including Morgan Stanley and Moody’s earlier predicted that India’s GDP growth could touch 7% in the current year. However, many experts are now under the impression that India’s economic growth may not reach the 7% mark. This is partly due to rising oil prices and the resulting inflation. Amidst these developments, HSBC’s estimate provides a highly optimistic outlook for the country’s economy.
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