7 Dec 2016

Q3 growth 5,5%

The government now expects GDP growth in third quarter to be as low as 5.5%, even as the second quarter generated 7.3%. We would expect overall FY17 growth to be in the range of 6.5-6.75% as a result of the currency note shock, about 1%+ lower than previously expected. One of the notable adaptations by consumers is likely to be postponement of discretionary purchases which may drive a surge in demand once the adjustment period is over. There may also be a rise in credit defaults, extending the hardship period but these are most likely to be in small amounts, limiting the impact on banks and NBFCs.

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