India Economic Forecast

India Economic Outlook

December 13, 2019

Economic growth slowed to a six-and-a-half-year low in Q2 FY 2019, which ran from July to September, as fixed investment grew at the weakest pace in nearly five years. Despite recent interest rate cuts by the Reserve Bank of India (RBI), a sharp moderation in bank lending growth weighed on fixed investment. On the other hand, private consumption and government consumption both grew at a faster pace in Q2. Turning to Q3, economic growth should modestly accelerate. Bank lending growth picked up in October for the first time in three months, suggesting recent interest rate cuts might be feeding into lending. However, consumer confidence and business confidence in the manufacturing sector both decreased in the quarter, pointing to modest private consumption and fixed investment readings. Moreover, the private-sector PMI averaged lower in the October–November period than in Q2.

India Economic Growth

Looking ahead, the economy should pick up steam in FY 2020, which starts in April 2020, due to accommodative fiscal and monetary policy. However, high levels of bad debt in the banking sector could impede lending and restrain consumption growth, while tense relations with Pakistan and global trade protectionism are downside risks. Our panelists expect GDP growth of 5.7% in FY 2019 and 6.4% in FY 2020, which is down 0.3 percentage points from last month’s forecast.

India Economy Data

Population (million)1,2501,2661,2831,3001,317
GDP per capita (USD)1,4881,6141,6331,7632,017
GDP (USD bn)1,8592,0442,0962,2912,657
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)
Public Debt (% of GDP)68.567.869.969.069.8
Money (annual variation in %)12.310.711.56.721.8
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)5.21.3-
Policy Interest Rate (%)8.007.506.756.256.00
Stock Market (annual variation in %)18.924.9-9.416.911.3
Exchange Rate (vs USD)60.0262.2966.2564.8665.11
Exchange Rate (vs USD, aop)60.4261.1465.4267.0464.46
Current Account (% of GDP)-1.8-1.4-1.1-0.7-1.8
Current Account Balance (USD bn)-32.8-27.6-22.1-15.2-48.7
Trade Balance (USD billion)-136.7-137.5-117.3-108.9-158.6
Exports (USD billion)314311262275305
Imports (USD billion)451448379384463
Exports (annual variation in %)4.6-1.2-
Imports (annual variation in %)-8.0-0.7-15.31.320.5
International Reserves (USD)304341356373421
External Debt (% of GDP)

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India Facts

Bond Yield6.50-0.04 %Jan 01
Exchange Rate71.23-0.09 %Jan 01

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