Ease of Do­ing Biz Help­ing In­dia Growth: Gold­man’s Moe

The Economic Times - - Commodities Plus - Biswa­jit.Baruah @times­group.com

Mum­bai: In­dia will re­main one of the strong­est growth stories in the re­gion, says Ti­mothy Moe, chief Asia Pa­cific re­gional eq­uity strate­gist, Gold­man Sachs. In a state­ment re­leased to ET, he said the cur­rent cycli­cal re­cov­ery –– cou­pled with im­prove­ments in the ease of do­ing busi­ness that have largely hap­pened ‘be­neath the radar’ –– are pos­i­tive signs for In­dia’s long-term growth and cor­po­rate earn­ings en­vi­ron­ment.


As far as long term growth prospec­tive is con­cerned, the po­ten­tial for In­dia is one of the high­est in the re­gion. In­dia has been trend­ing GDP growth of 6-7% or even more. So, ag­gre­gate to­pline GDP growth is strong and driven by favourable de­mo­graph­ics and lower per capita in­come, which al­lows more rapid growth as you catch up, start­ing from a low base. From a cycli­cal stand­point, the econ­omy is on an up­ward tra­jec­tory, and that’s helped by a more ac­com­moda­tive cen­tral bank, with rates and in­fla­tion com­ing down. That is start­ing to favour cor­po­rate earn­ings cy­cle which is the key thing for mar­kets.


The im­pact of re­forms has been like a glass half empty and half full. The half empty part is some head­line re­forms such as GST not yet be­ing passed. On the con­struc­tive side, there has been mi­cro level re­forms, such as the ease of do­ing busi­ness. This is fa­cil­i­tat­ing macro growth. This should trans­late into bet­ter cor­po­rate earn­ings. The longer term pos­i­tive driv­ers or five-year growth po­ten­tial is the fact that we have cycli­cal re­cov­ery in the econ­omy which ap­pears to be the be­gin­ning of a cycli­cal up­turn in prof­its.

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