India likely to go back to real GDP growth trend of 6.5% with these three drivers of economy firing: Aditya Birla Sun Life AMC#39;s CIO

India likely to go back to real GDP growth trend of 6.5% with these three drivers of economy firing: Aditya Birla Sun Life AMC#39;s CIO

GDP Growth, Economy



Mahesh Patil, CIO, Aditya Birla Sun Life AMC

In 2021, global equity markets attained new all-time highs driven by strong corporate earnings growth even in the face of COVID restrictions, supply chain disruptions, rising oil prices, and higher labour costs. Headline valuations ended at a 15-35 percent premium to long-term averages across the US, Eurozone, and emerging markets. India too was amongst one of the best-performing markets globally.

Going forward in 2022, global equity markets are likely to continue climbing a wall of worries on a number of fronts – growth peaking out, high inflation, US Fed accelerating its pace of tapering and rate hikes, slowdown in China, new COVID variants, high valuations, etc.

India, on the other hand, has come out of the second COVID wave and is catching up with the rest of the world. Its economy is recovering quickly as evidenced by strong macro data: better-than-expected GDP growth, PMI consistently in expansion zone, improved core sector growth, GST collections of above Rs 1.3 lakh crore for the sixth consecutive month and falling unemployment rate.

Also read - Budget 2022: India set for modest fiscal consolidation amid slow economic recovery

Going forward, over the next three years, we believe India