Indian economy to grow faster than China, Japan: Morgan Stanley

14 November 2014

India would have the fastest economic expansion among Asian countries as its gross domestic product (GDP) is expected to grow by 6.3 per cent in 2015, according to a Morgan Stanley forecast of global economies.

The Indian rupee's exchange rate to US dollar would be at Rs62.20 by end of next year compared with Rs62 in the current quarter that ends in March, according to a presentation made at the Morgan Stanley's Annual Asia Pacific Summit held in Singapore that ends today.

The exchange rate is seen at Rs62.50 in the first two quarters of next year and Rs62.30 in the third quarter of next year.

Compared to other Asian GDP growths, India would have the fastest economic expansion, it said.

India's gross domestic product is expected to grow by 6.3 per cent in 2015, up from 5.3 this year, it said.

''We are constructive on the INR from the outlook perspective,'' Chetan Ahya, Morgan Stanley's Chief Asia Economist, told PTI.

Strong capital inflows and the current account deficit under - 2 per cent would add upward pressure on the rupee.

Reforms are providing confidence to India's economic growth. The Indian government's policy to improve the business environment along with lower oil prices are among the factors supporting GDP growth, Ahya said.

Structural reforms related to land, labour and tax would support economic growth in the coming years. The risk would be disruption in execution and delivery of reforms as well as a slowdown in exports, he added.

On imports, the lower oil prices have been helpful and supporting the economic growth. Oil imports were down at 4 per cent of GDP now from 6 per cent in 2012.

''It is obviously helping the recovery process,'' Ahya said.

On a global level, Morgan Stanley has forecasted a sub-par growth at 3.5 per cent in 2015, up from 3.1 per cent this year. In Asia, China's GDP is forecasted to contract to 7.1 per cent in 2015 from 7.3 per cent in 2014.

Asia's GDP, excluding Japan, would grow at 6.3 per cent in 2015, up from 6 per cent this year. Japan's GDP growth would be stagnant at 0.8 per cent in 2014 and 2015.

Some 1,700 delegates, including representatives of 300 global corporations, are attending the summit.


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