Highlighting the benefits of economic reforms, the Fitch group company, BMI Research in its latest report has said that India and Indonesia are expected to witness a pickup in headline real economic growth in 2018. Terming 2017 as an impressive year of growth, it said that 10 out of 14 Asia Pacific economies saw their real GDP growth rates increase in year-on-year terms. For 2018, they have forecasted just two countries - India and Indonesia - to experience a pick-up in real GDP growth. It added that a majority of Asian economies barring India and Indonesia will see their growth rates slow slightly this year.
According to the report, India’s real gross domestic product (GDP) growth is expected to hit 6.7% in the year 2018 from 6.4% in 2017 as the country recovers from the transitory impact of its newly implemented goods and services (GST) system which was rolled out in July 2017 coupled with various economic reforms. It added that recapitalisation plan for public sector banks will lead to increased investment growth and economic activity over the coming quarters. Besides, Indonesia is anticipated as another regional outperformer with real GDP growth to rise to 5.3% in 2018.
BMI Research also noted that the pick-up in economic growth in India and Indonesia over the coming quarters will be driven by continued progress of economic reforms and improvements to the still- challenging business environment. However, risk to this outlook is increasing oil prices, which is a ‘bane’ for both India and Indonesia. It also pointed that both countries will be going for state elections in 2018 and general elections in 2019, which could result in an uncertain investment climate.
