DBS Group forecasts slow recovery of Indian economy in 2020

Singapore’s DBS Banking Group has shown bad signs about India’s GDP growth for this financial year. It has predicted it to go down to 5% from 5.5% as of now and it will sluggishly climb for the recovery of this nation’s economy. The international giant in financial prediction said that the narrative on India’s economy for this year was conquered by a strident slowing down in economic activity followed by a continuous stress of financial sector..

In its report ‘India Annual Outlook 2020’, DBS noted that this serious slowdown is a result of a series of factors. This is both cyclical and structural that points at the saddening slow leap to recovery in 2020. The report stated that Indian economy grew at its slowest speed in these last 6 years at as low as 4.5% during the Quarter 2 of current financial year. The GDP sat at 5% in the Quarter 1 that ended this June.

In addition to it, the report asserted that their GDP Now-cast Model recommended growth ended on a somber note in 2019. With high-frequency indicators are surprisingly denoting a sheer downside, we button up to the real GDP growth to 5% in fiscal 2020 that was previously 5.5%. There are certain conditions like favorable base effects, easier monetary settings etc. could support the demand. However, global conditions must stabilize at low levels.

In the February Budget of India, demand supportive actions are expected which can help the economy to grow in short term. It stated towards the three-tier support i.e. monetary, fiscal and macro policies.

Weal growth of Indian economy has severely impacted the revenue production, weaker run-rate for tax revenues is another compounding worry. Macro policies are much needed to attract foreign capital investments and portfolio inflows.

DBS expects the government for big ticket reforms in its second term, simplifying GST mechanism, giving more power to banking and NBFCs and a lot of stricter laws to tighten up the bankruptcy issues.