BackFresh covid wave, restrictions may dent India's Q4 growth: HDFC Bank report
The HDFC Bank report said there is a downside risk to its growth forecast to the tune of 20-30 basis points. Its current forecast for the January-March quarter is 6.1%
PremiumIndia's economic growth and its recovery may take a hit in the ongoing quarter as the country witnesses a resurgence in covid-19 cases and states resort to fresh restrictions, according to a report by HDFC Bank.
The bank, in its report, said there is a downside risk to its growth forecast to the tune of 20-30 basis points. Its current forecast for the January-March quarter is 6.1%
The report said the downside risks emanate from additional states imposing restrictions, and the curbs extending beyond January 2022. Further, a slowdown in global recovery will weigh on India's exports.
Reserve Bank of India Governor Shaktikanta Das in his statement post the monetary policy committee's meeting last month had noted that the downside risks to the outlook have risen with the emergence of Omicron and renewed surge in covid-19 infections in a number of countries.
"Besides, notwithstanding some recent corrections, headwinds continue to be posed by elevated international energy and commodity prices, potential volatility in global financial markets due to a faster normalisation of monetary policy in advanced economies, and prolonged global supply bottlenecks," he said.
The central bank has projected a growth rate of 6% for the fourth quarter of FY22 and 9.5% for the financial year.
The HDFC Bank report said that RBI’s liquidity adjustment measures will continue while rate hike expectations could moderate as Omicron risk looms.
In its last bi-monthly meeting, the MPC had decided to maintain status quo with regard to the policy repo rate with accommodative policy stance. The repo rate remains unchanged at 4% and the reverse repo rate at 3.35%.
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