India chartbook: Holding out for a second half recovery


FY20 growth is likely to be sub-7% for a second straight year. After hitting a speedbump in 1Q19, growth is likely to soften into 1HFY20.
Radhika Rao24 Jul 2019
Photo credit: AFP Photo


• FY20 growth is likely to be sub-7% for a second straight year. After hitting a speedbump in 1Q19, growth is likely to soften into 1HFY20. Favourable base effects and lower rates might help to lift activities in the 2H

• Inflation has been creeping up but is benign due to a weaker core. Monsoon strength and oil are under watch. We have revised down the FY20 inflation forecast.

• With fiscal consolidation a priority and inflation below target, monetary policy has adopted an accommodative hue

• Despite a proposed offshore sovereign bond issuance, reserves adequacy remains comfortable at this juncture

• After a sharp rally, INR bond yields are set to consolidate

• A supported US dollar and active reserves accumulation have kept the rupee under pressure. We look for USDINR to drift north by year-end with INR faring better than its export-reliant Asian peers



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Radhika Rao

Economist – India, Thailand & Eurozone
radhikarao@dbs.com

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