NEW DELHI: Trade tensions will likely remain a drag on Asia’s growth but India is still the best placed in the region against this backdrop – low goods exports, strong services exports and policy support for domestic demand, a Morgan Stanley report said on Tuesday.
The reversal of the unwarranted double tightening of fiscal and monetary policies will help drive the recovery in India.
“In fact, monetary easing is hitting full throttle across three fronts – rates, liquidity injection and regulatory easing. Trade tensions will weigh on the region’s trade outlook, but India is less exposed on account of its low goods exports to GDP ratio, ” the report mentioned.
Meanwhile, the policy support which will turn around its domestic demand outlook will allow India to outperform.
“We believe the recovery will continue to firm over the coming months. Green shoots are already emerging in recent data. Our preferred high frequency metric – goods and services tax (GST) revenue – has accelerated to an average of 10.7 per cent in January-February 2025 compared with an average of 8.9 per cent in Q3 2024 and 8.3 per cent in Q4 24, ” the Morgan Stanley report noted.