AEIR 2018

Transitory headwinds encountered by the landmark goods and services tax and lingering effects of the demonetization caused a slowdown in growth to 6.7% for fiscal year (FY) 2017. Inflation eased and the current account deficit widened. The economy is on track to rebound next year and grow at 7.3% on higher rural consumption, private investment, and net exports. Growth for the first quarter of FY2018 strengthened and the economy is on track to reach forecast growth for the year of 7.3%, with domestic demand as the main driver.

Reviving investment is crucial for future growth. The share of gross capital formation in GDP has been steadily declining since FY2011 from 34.3% to 28.5% in FY2017. This trend reflects the stress on corporate and bank balance sheets, excess industrial capacity, weak external demand, tepid household investment, and fiscal limitations.

Source: Asian Development Outlook 2018, and Asian Development Outlook 2018 Update, ADB.
Latest Month-Ago Year-Ago
Composite Stock Price Index 1 37.0 (Mar19)36.0 33.0
Broad Money Growth 2 10.8 (Feb19)10.8 10.4
Headline Inflation Rate 3 2.6 (Feb19)2.0 4.4
Industrial/ Manufacturing Production Growth Rate 3 1.7 (Jan19)2.6 7.5
Merchandise Export Growth 3 2.5 (Feb19)2.5 3.8
Exchange Rate Index 4 156.7 (Mar19)160.6 146.7
1 Monthly average, local index.
2 %.
3 y-o-y, %.
4 Monthly average, January 2006 = 100, $/local currency.
Source: Bloomberg LP; CEIC database; Ministry of Statistics and Program Implementation; Ministry of Commerce and Industry.

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