Growth Outlook: Indian economy to continue its rising momentum in 2023 on THESE factors – know what Morgan Stanley says in report
India's economic growth slowed to 6.3 per cent in the September quarter of 2022-23 compared to 13.5 per cent in the preceeding three months amid a contraction in output of manufacturing and mining sectors.
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04:12 PM IST
Growth Outlook 2023: The Indian economy in the coming year 2023 is likely to continue its growth momentum on the back of sustaining domestic demand strength, a global brokerage firm Morgan Stanley said in its report while analysing the growth outlook for the next year in Asian countries.
In 2023, we expect domestic demand to remain in the driver's seat for growth as the domestic demand-oriented economies like India have been insulated from the weaker external demand conditions, the global brokerage house said in its outlook report.
It added the country’s growth rates have held up better and have been the key support to the regional growth story in recent quarters.
India's economic growth slowed to 6.3 per cent in the September quarter of 2022-23 compared to 13.5 per cent in the preceeding three months amid a contraction in output of manufacturing and mining sectors, according to government data released on November 30, 2022.
Slower GDP expansion notwithstanding, India continues to remain the fastest-growing major economy ahead of China which registered an economic growth of 3.9 per cent in July-September 2022. The Indian economy grew by 8.4 per cent in the July-September quarter of last fiscal.
Commenting on India’s economic growth in 2023, Upasana Chachra - Chief India Economist - at Morgan Stanley said, “We expect domestic demand indicators to exhibit broad-based recovery and to be the key driver of India’s growth trajectory amid global headwinds.”
She further said, “We expect the domestic demand strength to hold up as the economy benefits from: 1) the full impact of the reopening vibrancy, 2) filtering through of the government’s supply side focused policy measures to reinvigorate capex, and 3) stronger private sector balance sheet to help improve corporate sector risk appetite.”
Similarly, the Chief India Economist also expects the Reserve Bank of India (RBI) to take the terminal policy rate to 6.5 per cent in February 2023, before pausing to balance between macro stability and growth.
As inflation dynamics improve, the analyst expects a shallow rate cut cycle of 50 basis point (bp) building in rate cuts of 25 bp in the fourth quarter of the financial year 2022-23 (Q4FY23) and the first year of the financial year 2023-24 (Q1FY24).
The next phase of the recovery in domestic demand in India and Indonesia will involve a pickup in private capex, aided by healthy private balance sheets and a prudent policy mix, the brokerage said.
With PTI Inputs
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