Indian economy clocks 7.7% GDP growth rate: Moody's

According to the Moody's Investors Service, Indian economy has clocked 7.7 growth rate in the first quarter of the current fiscal and it is expected to grow 7.5 per cent in 2018- 2019. In its Global Macro Outlook for 2018-19, Moody's concluded that the run-up in energy prices over the last few months will raise headline inflation temporarily but the growth story remains intact as it is supported by strong urban and rural demand and improved industrial activity. High-frequency indicators suggest a similar outturn for the second quarter. While robust activity is shown in the industrial sector, a normal monsoon together with the increase in the minimum support prices for Kharif crops should support rural demand. Thus, despite external headwinds from higher oil prices and tightening financing conditions, growth prospects for the remainder of the year remain in line with the economy's potential.

It further added that growth prospects for many of the G-20 economies remain solid, but there are indications that the synchronous acceleration of growth heading into 2018 is now giving way to diverging trends. The near-term global outlook for most advanced economies is broadly resilient, in contrast to the weakening of some developing economies in the face of emerging headwinds from rising US trade protectionism, tightening external liquidity conditions and elevated oil prices. The agency further revealed that G-20 growth will be at 3.3 percent in 2018 and 3.1 percent in 2019 and the advanced economies will grow 2.3 percent in 2018 and 2 percent in 2019, while G-20 emerging markets will remain the growth drivers at 5.1 percent in both 2018 and 2019. It may be recalled that Moody's had in May cut the growth for 2018 to 7.3 percent from the previous estimate of 7.5 percent, saying the economy is in cyclical recovery but higher oil prices and tighter financial conditions will weigh on the pace of acceleration.