India’s economic growth momentum is likely to slow down, according to the Japanese financial services firm called Nomura.
“The economic recovery, which began in the fourth quarter of 2014, is headed into a consolidation zone into the second quarter of 2016,” Nomura said.
Nomura’s proprietary indices for India, together with the high frequency data, indicate some slowdown in the growth momentum towards end-2015 and a high likelihood of further monetary policy easing, it said in a research note.
There is a ‘downside risk’ to its baseline forecast of 7.8 percent GDP growth in 2016, it said.
A reading still above 100 on the Nomura Composite Leading Index suggests a mid-cycle consolidation, rather than the start of a downturn in India, it added.
While improving urban consumption demand and a robust transportation sector are supporting growth, weak external conditions and sluggish investment demand are weighing on the pace of the recovery, it said.
The report also said the Reserve Bank of India (RBI) is expected to deliver a final 25 basis points rate cut in April, utilising the room afforded by lower commodity prices.