India’s economy is expected to record a growth by around 7.5 per cent in 2018 and 2019 as it is strong enough to protect itself from external pressures such as higher energy prices, according to a report released by Moody's Investors Service on Thursday (23).
India may witness higher inflationary trends temporarily as a result of the current upward trend in crude oil prices in the international market. However, the country’s growth will remain intact as it is highly supported by urban and rural demand and improved manufacturing activities.
“Growth prospects for many of the G-20 economies remain solid, but there are indications that the synchronous acceleration of growth heading into 2018 is now giving way to diverging trends,” said Moody's in its Global Macro Outlook for 2018-19.
According to the outlook released, Moody’s pegs G-20 nations growth rate at 3.3 per cent in 2018 and 3.1 per cent in 2019. The developed economies will witness a growth of 2.3 per cent in 2018 and two per cent in 2019, whereas G-20 emerging economies are expected to remain the growth drivers at 5.1 per cent in 2018 and 2019.
A boom in industrial activity in urban areas while a normal monsoon along with government-sponsored minimum support prices for monsoon crops have forced Moody's to peg India’s growth rate at 7.5 per cent.
“Thus, despite external headwinds from higher oil prices and tightening financing conditions, growth prospects for the remainder of the year remain in line with the economy’s potential,” the report said.
“The near-term global outlook for most advanced economies is broadly resilient, in contrast to the weakening of some developing economies in the face of emerging headwinds from rising US trade protectionism, tightening external liquidity conditions and elevated oil prices,” the report highlighted.
