Indian economic growth likely to have accelerated in Q1 2018 – DBS Bank

Indian first quarter economic growth is set to be released this week. According to a DBS Bank research report, the Indian economy is likely to have grown 7.5 percent year-on-year, as compared with the prior quarter’s 7.2 percent and GVA at 7.1 percent. DBS stated that the GDP Nowcast mode; also indicates towards a rebound in trend growth at the beginning of the year. Consumption is expected to have rebounded, using auto, tractor sales and consumer production as proxies, albeit rural wage growth continued to moderate.

Factory output had a solid run, growing 6.2 percent year-on-year in the first quarter of this year as compared with 3 percent of the first quarter of 2017. The growth was driven by consumer and capital goods. Government spending eased a bit as end-fiscal year seasonal moderation set in, but higher public spending from the earlier quarters were probably supportive of investment trends. Base effects might also add to headline as growth took a hit post-demonetisation in the comparable period last year.

“The external sector will be the main drag as the merchandise trade gap widened by a quarter, largely due to slower exports – 10 percent YoY vs 1Q17’s 27 percent”, added DBS Bank.

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