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Exports to Drive India's Growth, RBI to Hike Rates Twice More: HSBC Economist
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CNBC TV18•30-09-2026, 12:33
Exports to Drive India's Growth, RBI to Hike Rates Twice More: HSBC Economist
- •HSBC's Pranjul Bhandari expects exports to be a strong driver of India's economic growth, moderating to 7-7.5% from 7.8%.
- •Bhandari anticipates two 25-basis-point RBI rate hikes in October and December due to inflation remaining above 6% for several months.
- •India's growth has surprised positively despite weak monsoons and high oil prices, supported by government spending and rising exports.
- •Real exports have increased 12% year-on-year, marking a shift from India's traditional reliance on domestic demand.
- •New free trade agreements, particularly with consumer markets like the UK and potentially the EU, are expected to fuel the next phase of export growth.
Key Questions Answered
Pranjul Bhandari expects consumer inflation to remain above the RBI's 6% upper tolerance band for several months, specifically through October, November, and December, leading to two 25-basis-point rate hikes in October and December.
Goods exports have emerged as a strong growth driver, with real exports rising 12% year-on-year and nominal exports increasing 25%, marking a shift toward external demand alongside government capital expenditure and formal sector consumption.
New trade agreements are providing a leg of export-led growth, with the India-UK FTA having increased India's exports to the UK by 12% month-on-month, while future agreements with the EU could further boost competitiveness.
