Morgan Stanley maintains India GDP growth estimate of 10.5% for FY22

  • Morgan Stanley on Wednesday maintained its estimate of India GDP growth at 10.5 per cent for FY2022 versus the general consensus of 9.2 per cent.
  • “We expect economic activity to start normalising from quarter ending September, supported by pent-up demand, ramp-up of the vaccination drive (which is picking up pace and tracking at an average of 7 million per day), favourable policy mix and robust global growth,” it said in a research report.
  • GDP growth is expected to move into positive territory on a two-year CAGR basis from QE September.
  • However, said Morgan Stanley, key risks to watch are the pace of vaccination (any slowdown could increase risks) and the trend in Covid-19 cases — potential re-acceleration, threat from new variants and restrictions on activity.
  • GDP grew 20.1 per cent year-on-year in the quarter ending June. On a two-year CAGR basis, real GDP contracted 4.7 per cent in QE June versus plus 2.3 per cent in QE March.
  • On a seasonally adjusted sequential basis, GDP declined 6.3 per cent, reflecting the impact of restrictions on activity as the second wave surged during April and May.
  • On the demand side, private consumption and fixed capital formation declined on a two-year CAGR basis while government consumption and exports rose.
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