In its official statement on Monday, Morgan Stanley has revealed that India will continue to maintain its upward growth trend in FY 2016-17. Raising its growth estimate for India to 7.7 percent for the FY 2016-17 from 7.5, Morgan Stanley claimed that the impact of Brexit would be less severe here than other big economies since India’s dependence on export to the UK is very limited.
Morgan Stanley said that India’s upward growth curve is becoming stronger due to high GDP rate for the quarter ending March 2016. Indian economy maintained a robust growth rate of 7.9 per cent in the fourth quarter of 2015-16, which was the highest Gross Domestic Product (GDP) growth level in the last five years. However, overall growth rate for Asia is expected to remain bleak at around 3.2 per cent for the FY 2017.
“The global economy has been oscillating between periods of alternating growth improvement in either developed markets or emerging markets. We expect this situation to continue, but emerging market growth is likely to accelerate for the first time in four years while developed market growth decelerates. We think that the risks to the outlook are driven by the three factors of productivity, politics and policy,” says Chetan Ahya, Managing Director, Morgan Stanley Asia in his recent report on “Global Macro Summer Outlook: Clouded by Politics and Policy – Uncertainty”.
Goldman Sachs also reiterated the same points that global economy is expected to improve slowly in the remaining half-year of 2016. The world economy is expected to grow by just 3 – 3.5% which owes largely due to the sudden Brexit announcement. Chinese economy is expected to decelerate more in the next few months.
Contrarily, the latest prediction by the International Monetary Fund (IMF) on India’s growth suggested there will be slight drop in India’s GDP growth by 0.1 % in the current fiscal year. A couple of days after Morgan Stanley’s enhanced GDP growth estimate, International Monetary Fund (IMF) has in fact countered the same by saying India will continue to grow by 7.4 GDP growth rate in FY 2016-17 and 2017-18. The reduced prediction of India’s GDP growth rate came in the light of slow pace of investment activities in the country over the last few months.