“For investment advisors only”
Buoyed by a recovery in the manufacturing sector, India’s economy rebounded in the quarter ended September 30, following five quarters of slowing growth. The country’s GDP growth rose to 6.3% for the July- September quarter, up from 5.7% in the previous quarter, which was the lowest growth rate in three years.1
As a result, the International Monetary Fund (IMF) has indicated that it may update India’s growth forecast in the January issue of its World Economic Outlook (WEO).2 Earlier, the IMF’s October 2017 WEO placed India’s GDP growth at 6.7% in 2017 and 7.4% in 2018.
The recent rebound in growth suggests that the Indian economy may have shaken off the lingering effects of the demonetization of high value currency notes in November 2016 and the rollout of the Goods and Services Tax (GST) in July 2017.3
“Perhaps the impact of the two structural reforms—demonetization and GST—is behind us and hopefully, we can look for an upward trajectory in the third and the fourth quarter,” noted India’s Finance Minister Arun Jaitley.4
According to India’s Chief Statistician, T.C.A. Anant, the manufacturing sector led the recovery, with the impact of the GST beginning to wane. The manufacturing sector grew by 7% in the September quarter compared with 1.2% in the previous quarter, according to the government statistics.5
The pick-up in recent period in economic growth provides the country’s Central Bank with enough leeway to keep interest rates on hold on December 6 in the wake of an increase in inflationary pressures. Currently, the benchmark rate is at its lowest in seven years, while consumer price inflation has surged to a seven-month high, inching towards the Central Bank’s medium-term inflation target range of 4%.1
Growth in India is also expected to increase on the back of higher levels of private investments resulting from a landmark proposal to recapitalize struggling state-run banks. This move may lead to more credit being made available to industry, leading to higher investment growth.1
 Bloomberg, November 2017, “India’s Economy Bounces Back From Three-Year Low”
 The Times of India, December 2017, “Buoyed by September GDP, IMF to update India's growth rate forecast in January”
 IMF: World Economic Outlook, October 2017
 Livemint, November 2017, India’s GDP growth rebounds to 6.3% in September quarter
 Business Today, December 2017, “India's Q2 GDP growth jumps to 6.3 per cent, breaks five-quarter slide”
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Speculation or stated beliefs about future events, such as market and economic conditions, company or security performance, upcoming product offerings or other projections are “forward-looking statements.” These forward-looking statements represent the beliefs of the speaker or author and do not necessarily represent the views of Excel. General business, market, economic and political conditions could cause actual results to differ materially from what the speaker or author presently anticipates or projects. The information presented here is for informational and illustrative purposes only and is not intended to provide specific financial, investment, or other advice to you, and should not be acted or relied upon in that regard without seeking the advice of a professional. Particular investments or trading strategies should be evaluated relative to each individual. Information provided by external sources is subject to change at any time. Excel Funds is not responsible for the accuracy, reliability or timeliness of the information supplied by external sources. Users wishing to rely upon this information should consult directly with the source of the information. Content provided by external sources is not subject to official languages, privacy and accessibility requirements.