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Last Updated : Aug 24, 2016 09:35 PM IST | Source: Moneycontrol.com

See 7.9% GDP growth; consumption to cushion capex slack:Goldman

The full year growth will be benefited by a good monsoon, recently introduced 7th Pay Commission, clearance of key reforms, favorable fiscal monetary policy and continuation of foreign direct investment (FDI) inflows, says Goldman Sachs in a note.


Moneycontrol Bureau

Goldman Sachs continues to maintain its GDP growth forecast of 7.9 percent for this fiscal. The on-going second quarter is expected to grow at 7.8 percent level backed by higher government spend and rise in consumption activity, a note by the broking firm says.

It expects robust consumption trends to offset weak private investment in the economy.

The full year growth will be benefited by a good monsoon, recently introduced 7th Pay Commission, clearance of key reforms, favorable fiscal monetary policy and continuation of foreign direct investment (FDI) inflows, says the note.

“Corporate leverage and bank NPL issues may constrain activity in heavily levered sectors, but are unlikely to trump the improvement elsewhere,” says the note.

Goldman Sachs has also upped its inflation forecast for FY17 to 5.5 percent. Narrowing of output gap as well fading favorable base effects of low commodity prices are likely to lead to rise in inflation as compared to the last year, it says.

Goldman Sachs does not expect RBI to cut rates anytime this year and believes that rupee may tread on a gradual depreciation path.

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First Published on Aug 24, 2016 10:31 am
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