India is the largest stable economy in the emerging markets basket despite facing its own share of cyclical challenges, according to Filippo Gori, head of Asia Pacific Banking at JP Morgan.
“It is stable in the sense that inflation is below the government's target and its current account deficit is only around 2 percent of its GDP,” Gori told BloombergQuint during the JP Morgan Investor Summit. “Reserve Bank of India has room to cut further rates and our expectation is that economy will grow in the second half of the current year to end financial year 2019-20 at 6 percent overall GDP growth.”
This comes as the country's GDP growth fell to 5 percent in the first quarter of current year—its lowest in over six years. Indians have been tightening their purse strings, resulting in receding rural growth for consumer staples and fewer sales for auto companies.
JP Morgan said the U.S. Federal Reserve easing its monetary policy is a “positive trend” for emerging market asset classes as a whole. “However, we don't recommend investing in EM asset classes overall as except specific markets such as India, Brazil and Indonesia.”
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