Despite the massive disruptions in both demand and supply side factors as caused by the COVID-19 pandemic and further geopolitical distress, India is the only economy among the top ten leading economies which has shown consistent improvement in its macroeconomic performance during the last four years, an industry body said in a report.
In the ranking of International Economic Resilience (IER) of the Top 10 Countries in each of the years between 2019 and 2022, India has consistently improved its position from sixth position in 2019 to third position in 2021 and is projected to further improve it to second position in 2022, according to data released by PHD Chamber of Commerce and Industry in its report Pre and Post COVID Economic Dynamics of Leading Economies.
The PHDCCI report is based on the comparative analysis of the leading economies’ conducted on the basis of the five leading economic parameters viz., Real GDP growth Rate parameter, Merchandise Export Volume Growth rate, Current Account Balance (% of GDP), General government net lending/borrowing (% of GDP), and Gross Debt to GDP ratio.
“The conjuncture of COVID-19 led economic crisis and the intensifying geopolitical distress have exposed the world economy to a diverse range of domestic and external vulnerabilities,” said Pradeep Multani, President, PHD Chamber of Commerce and Industry in a press statement issued on Saturday.
The rank analysis of IER based on the 5 lead macroeconomic indicators suggests that India’s macroeconomic endurance has consistently improved over the last four years as compared to the other leading economies in the world, he added.
As per report, Germany and Canada both have gained the 1st Rank in the International Economic Resilience. Also, among the ten leading economies of the world, Germany’s International Economic Resilience (IER) Rank has remained intact at 1st in the pre COVID year of 2019 as well as the post COVID year of 2022.
Countries which have shown overall improvement in their IER position in 2022 vis-à-vis 2019 include Canada (IER Rank in Y2019 was 2nd & in Y2022 is 1st), India (IER Rank in Y2019 was 6th & in Y2022 is 2nd), Italy (IER Rank in Y2019 was 5th & in Y2022 is 4th), Japan (IER Rank in Y2019 was 8th & in Y2022 is 5th) and the USA (IER Rank in Y2019 was 7th & in Y2022 is 6th), the PHDCCI report said.
On the other hand, countries which have shown a declining resilience include China (IER Rank in Y2019 was 2nd & in Y2022 is 3rd), UK (IER Rank in Y2019 was 3rd & in Y2022 is 5th), France (IER Rank in Y2019 was 4th & in Y2022 is 6th) and Brazil (IER Rank in Y2019 was 9th & in Y2022 is 7th).
India’s greater and stronger supply-side interventions helped to improve its factors’ mobility. The pace of economic activity remains strong due to the structural reforms undertaken by the Government during the last 2 years, said Multani.
Going ahead, extracting the innate robustness of its underlying fundamentals and supported by a pragmatic and encouraging policy mix, Indian economy is projected to continue to grow at the fastest rate as compared to other leading economies in the world, he said
As per the IMF estimates of April 2022 WEO, India’s real GDP growth rate and merchandise export growth rate for 2022 are projected to be the strongest at 8.2% and 7.0% respectively.
At this juncture, further expansion of trade and industry would be imperative to sustain the growing economic momentum. Further encouragement to MSMEs, agricultural and manufacturing sectors to make Indian supply chains more diverse will go a long way in realizing India’s economic recovery, further strengthening its economic resilience, and thus allowing for its even faster adaptation to such unprecedented times, added Multani.
Going forward, there is a greater need for the Indian economy to focus more on long-term growth prospects which would help leverage the ever-evolving geostrategic opportunities.
It is suggested that India calibrate its economic policies in such a way that helps to take advantage of its external economic environment to foster an even stronger internal transformation. Further, even a more pronounced thrust on prioritising innovation would be a vital ingredient to unlock post COVID economic growth.
Therefore, further improvement in ease of doing business would help uplift business confidence and pull a larger number of both domestic and foreign investments to the Indian economy.
The post-COVID new normal is absolutely distinctive from the pre-COVID times. The concerted efforts of the central Government and the state Governments, through harmonization of both monetary and fiscal policy measures, would help address the challenges posed by rising inflationary pressures, thus allowing the Indian economy to further nurture its resilience and hence come out of the compounded effects of pandemic induced structural constraints, said Multani.
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