Indian economic growth likely to have slowed down in Q3 2018, RBI likely to stand pat in December

The third quarter economic growth data of India is set to release tomorrow. According to a TD Economics research report, the economic growth is likely to have slowed to 7.3 percent year-on-year from a two-year high of 8.2 percent year-on-year seen in the second quarter.

This is mainly because the activity was dampened by decelerating rural incomes and a larger oil import bill being a drag on the net trade position. Also, unfavourable base effects might decelerate growth till mid-2019 beyond which the rate will turn up.

“With inflation continuing to surprise on the downside (November’s CPI is likely to slip below 3 percent) and a widening output gap, the Reserve Bank of India (RBI) will leave rates unchanged in December”, added DBS Bank.