Global Macro Outlook for 2019 and 2020

Moody’s has released its quarterly Global Macro Outlook for 2019 and 2020. The outlook highlights the following points about India:

• Indian economy is expected to grow at 7.3 per cent in the calendar year 2019 and 2020. The proposed government spending ahead of elections in 2019 will support near-term growth.
• India is less exposed to the slowdown in global manufacturing trade growth when compared to other major Asian economies emerging markets. India is poised to grow at a relatively stable pace in the two years.
• In the financial year, 2018-19 Indian economy is estimated to have grown 7 per cent, lower than 7.2 per cent in 2017-18.
• The direct cash transfer programme for farmers and the middle-class tax relief measures announced in the Interim budget 2019 will contribute a fiscal stimulus of about 0.45 per cent of GDP.
• Although the overall strength of the Indian Banking system is improving, it remains a constraint on the economy.
• The report states that a complete turnaround of the banking system requires more time amid slower-than-expected resolution of legacy problem loans.

The report concludes that with range-bound oil prices, export growth has outpaced import growth for the last two years. Fiscal spending on infrastructure and the rural economy should continue to support domestic activity.