Growth numbers to improve from June quarter: Morgan Stanley

The numbers to accelerate due to strong import growth in June

Strong import growth in June points to continued recovery in India's domestic demand and indicates that economic expansion will accelerate from the April-June quarter, says a Morgan Stanley report.

According to global financial services major, exports growth weakened sequentially for the fourth consecutive month - but imports growth remained strong, pointing towards robust domestic demand.

Growth in exports, it said, averaged 10.2 per cent year- on-year, moderating from the 18.3 per cent pace of growth registered in the March quarter.

Total growth in imports however stayed strong at 19 per cent year-on-year in June.

While oil imports and gold and silver imports growth dipped on a month-on-month basis, non-oil, non-gold imports continued to post strong double-digit growth during June.

"Imports growth data has remained strong, indicating a robust pickup in domestic demand. This has been corroborated by other high-frequency growth indicators, reinforcing our view that growth will accelerate from second quarter of 2017 onwards," Morgan Stanley said in a research note.

The report further noted that non-oil, non-gold imports held up well, growing at 17.2 per cent year-on-year in June versus 18 per cent in May.

"Non-oil non-gold imports growth (a proxy for domestic demand) continued to post strong double-digit growth, 17.2 per cent YoY in June as compared to 18 per cent YoY in May," the report said.