India’s GDP may drop to 7.2 percent in second half of 2018: Report

Gross Domestic ProductIndia’s Gross Domestic Product (GDP) that accelerated to 7.7 per cent in January-March quarter due to robust performance by manufacturing and service sectors, may slow down a bit in the second half of 2018, says Nomura report.

According to the global financial services major, India’s economic recovery has reached its peak and therefore growth rates are likely to get stagnant in the second half of this year.

“Our proprietary indicators suggest the inflection point for the cyclical recovery may just be around the corner,” said Nomura in its research note.

The report revealed that several financial conditions such as slowing down global growth and adverse terms of trade will restrict the growth in the second half of 2018.

Nomura expects GDP growth will slip down to 7.2 per cent in the second half of 2018 from around 7.8 per cent in first half.

“For now, strong core momentum, sticky global oil prices and higher minimum support prices suggest conditions are ripe for another 25 bp rate hike in August. We expect a long pause on policy rates thereafter as growth and inflation slow,” Nomura said.

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