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ANZ analysts are further lowering their India’s GDP forecasts for both FY2020 and FY2021 with revised forecasts now standing at 6.2% and 6.5% compared with 6.5% and 7.1% previously.

Key Quotes

“Not only are these forecasts significantly below consensus but they also point to a prolonged period of sub-potential growth.”

“Various high frequency consumption and investment indicators have remained weak. Corporate earnings have also regularly disappointed and forward guidance remains downbeat. The difficult external environment, in combination with an over-valued rupee, continues to suppress exports.”

“In our view, it will take considerable time for growth to regain buoyancy even with a supportive monetary policy.”

“Fiscal policy has also been expansionary once off-budget spending is considered. Unfortunately, not only has it had limited success in reversing the slowing growth momentum but also cannot be stretched much further.”

“The bottom line is that India’s GDP growth will fall short of its true potential in the foreseeable future, even with a supportive policy framework.”