Indian economy growing fastest in world, new survey finds

31/05/2016

Indian construction workersIndian economy: A Reuters survey of economists due out on Tuesday is expected to show that India’s GDP grew by 7.5% year-on-year between January and March, confirming its position as the world’s fastest growing economy. This upbeat outlook contrasts with neighbouring China, where growth slipped to 6.7% in Q1, the slowest rate it has recorded in seven years.
Given the poor prospects for a boost from exports, however,  Moody’s Investors Service is warning that 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 lacklustre, a sustained improvement in domestic private investment would be required for the growth momentum to be sustained,” it is predicting.
In the meantime, the Reserve Bank of India (RBI) is widely expected to keep its policy interest rate on hold at a review on June 7 as it waits for banks to fully pass on the previous the benefits of earlier cuts to borrowers. Consumers, particularly in urban areas, have been encouraged by the lower rates, with sales of passenger cars and two-wheelers are growing at double-digit rates. Impending increases in wages and pensions of government employees are also expected to underpin consumer spending.

Source: reuters