India probably gathered momentum to hold its ranking as the world’s fastest growing large economy in the quarter through March, giving Prime Minister Narendra Modi more reason to celebrate after completing two years in office last week, Reuters reports.
Modi swept to power promising to revitalize Asia’s third-largest economy and, despite a dearth of private investment and shrinking exports, his policies are having some success as cooling inflation and lower interest rates have boosted consumer demand.
A Reuters survey of economists expected data out on Tuesday will show India’s gross domestic product grew 7.5 percent year on year between January and March, faster than the previous quarter’s 7.3 percent.
“This 7.5 percent growth, in a global slowdown environment, has a potential to pick up even more,” Finance Minister Arun Jaitley said last week in general comments about the trends.
India’s upbeat outlook contrasts with neighboring China, where growth slipped to 6.7 in the first quarter – the slowest posted by the world’s second largest economy in seven years.
Given the dim prospects for a boost from exports, Moody’s Investors Service said a recovery in private investment would be needed if India’s upturn was going to last.
“Combined with the fact that external demand is likely to remain lackluster, a sustained improvement in domestic private investment would be required for the growth momentum to be sustained,” the rating agency’s analysts wrote in a note.
Meantime, the Reserve Bank of India is widely expected to keep its policy interest rate on hold at a scheduled policy review on June 7 as it waits for banks to fully pass on the previous the benefits of earlier cuts to borrowers.
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