Q2 GDP data published today were strong relative to a year ago but suggest that momentum slowed sharply in q/q annualised terms. We had expected the recent weakness but do not think that it will last. Domestic private sector spending will probably ensure that the economy will expand rapidly in coming quarters even as stimulatory policies are withdrawn and global growth slows. Another Reserve Bank (RBI) rate hike looks certain at the mid-September monetary policy review.
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