Morgan Stanley sees economy crossing $5 tln by 2025

With improvement in macroeconomic indicators and steady implementation of policy reforms, the economy is likely to cross the USD 5-trillion mark by 2025, a Morgan Stanley report said. "In our base case, we expect a steady pace of implementation of policy reforms, which will lay the foundations for the country's real GDP growth to move higher to an average of 6.75 percent over the next 10 years," the research report said. "If our projections were to come to fruition, the economy would pass the USD 5 trillion mark, a feat that has been achieved by only the US and China thus far and would make India the fifth largest economy (from 10th currently) in the world," it added. Saying that the worst is over, the report noted the effects of policy measures over the past 12 months are beginning to show in improving macro stability indicators.

"There is growing evidence that the market believes in a new growth cycle - the most pertinent signal being the widening gap between bond and equity yields," the report said. It also pointed out that the medium-term growth trend of the domestic economy would be supported by the inter-play of the structurally positive factors of demographics, reforms and globalisation. It also said in the coming 12 months, growth recovery will remain slow, but will pick up from FY16 onwards. Emphasising on variables like economic reforms, the report said the improvement in the external environment along with a pickup in the pace of structural reforms would be the key factors for growth revival.

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