India’s GDP may reach pre-pandemic levels by Q3 FY22: Acuite Ratings
While most of the developed markets have either surpassed or reached closer to the pre-pandemic GDP levels in the June quarter of FY22, some of the emerging economies, particularly India, continue to trail behind those levels
NEW DELHI : India’s GDP is likely to reach pre-pandemic levels by the December quarter of the current financial year, Acuite Ratings said on Tuesday.
While most of the developed markets have either surpassed or reached closer to the pre-pandemic GDP levels in the June quarter of FY22, some of the emerging economies, particularly India, continue to trail behind those levels, reflecting the deeper impact of the pandemic.
While India’s June quarter GDP in FY22 stood at 20.1% year-on-year, it is still 9.2% lower than the June quarter of FY20 in real terms. Although the performance of the manufacturing and the export sector were better during the second wave of the pandemic vis-à-vis that during the national lockdown last year, the severe impact on the contact intensive services is seen clearly.
“With vaccination covering a critical mass, accommodative policy backdrop, approaching festive season and favourable global growth outlook, we expect India’s GDP to reach its pre-pandemic levels by Q3 FY22. As such, we continue to retain our FY22 growth forecast at 10% with downside risks emanating from possibility of a third wave of infections, though the loss of economic momentum is expected to be much less in comparison to the second wave," Suman Chowdhury, chief analytical officer, Acuité Ratings & Research said in a statement.
Encouragingly, the last week of May saw domestic economic activity bottom-out and a momentum has continued to build up over August 2021. This is validated by high frequency indicators such as e-way bill collections, Google mobility, auto sales, power generation, rail passenger movements among others shifting into swift recovery mode with most of them nearing their pre-second wave respective peaks.
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