Morgan Stanley, the global financial services powerhouse, on Monday forecast that near-term growth of the Indian economy will remain weak but it will improve in 2020 because of policy measures and action to support growth.
In a report titled ‘A Slow-Motion Recovery’, Morgan Stanley said while the real GDP growth will average 5 per cent in the current year, it will improve to 6.3 per cent in the next year and 6.8 per cent subsequently.
“Apart from a cyclical recovery, we expect a policy focus on improving the growth trend through productivity-enhancing measures, which help to create a virtuous cycle of growth,” it said.
The past year has been marked by slowing growth resulting from a combination of factors — risk-aversion in the financial and corporate sectors and a slowing trend in capex, which has led to adverse implications on job growth and demand.
“In the near term, we expect growth to remain weak, but the 2020 outlook builds in a steady improvement supported by past policy actions — monetary easing and transmission picking up pace, support from lower corporate tax rates which will strengthen corporate balance sheets and improve capex, alongside an expectation of continued policy action from the government,’’ the report said.