DBS expects moderate improvement in GDP growth to 5.5% in FY15: Media Report

Posted By: Religare
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DBS expects moderate improvement in GDP growth to 5.5% in FY15: Media Report
Singapore-based brokerage DBS has forecast a moderate spike in India's FY15 GDP growth to 5.5 per cent on a positive poll outcome leading to a stable government taking office after the upcoming elections, reported PTI.

"GDP growth can be expected to improve moderately from an estimated 4.8 per cent in FY14 to 5.5 per cent in FY15. Bulk of this should stem from higher capital formation, up 4.5 per cent from less than 2 per cent in FY14.

"Despite this, we don't expect overall growth to return above 6 per cent anytime soon," DBS economist Radhika Rao said in a note, 'Elections is about the economy, not just markets'.  She discounted a major rout in the equity and forex markets in case of an unexpected negative poll outcome, saying most of the risks could have already been factored by mid-May.

Rao said in the immediate term, the positive impact on sentiment and financial markets will be palpable, with the feed-through into real output working with a considerable lag.

Noting that the markets are euphoric ahead of the elections, she said "unfortunately, the future of the country rests not with fickle market sentiments, but with a concrete economic agenda by the next government."

Expecting a stable but coalition government, Rao said if at all the outcome is a bit disappointing, it will not lead to a massive flight of capital.

Dion Global Solutions Ltd.

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