After a rocky year for India’s economy, the worst may finally be over and a steady acceleration in growth can be expected over the next fiscal year, according to Goldman Sachs.
An improvement in exports and an increase in investment demand should drive growth to 5.5 percent in the financial year ending March 31, 2015, the investment bank wrote in a note this week, up from an expected 4.3 percent in the current year.
Goldman expects India exports to be driven by a pick-up in the global economy and fall in the value of the rupee, which hit a record low of 68.85 to the U.S. dollar in August.
The bank also sees companies more willing to spend once the national elections expected by April/May next year is out of the way. In the previous election years of 2004 and 2009, industrial activity improved significantly in the six months following the vote compared to the six months prior to the polls, the bank observed.
“Upcoming elections may have delayed investment decisions by firms as they await the policies of the new government,” said Goldman.