Second Covid wave impact: OECD trims India growth forecast for FY22 to 9.9%
1 min read 31 May 2021, 02:20 PM ISTThe world economy is now experiencing diverging fortunes after being uniformly battered by the pandemic last year, OECD said
PremiumThe Organisation for Economic Co-operation and Development (OECD) on Monday slashed India’s growth projection for FY22 to 9.9% from 12.6% estimated in March as a resurgence of covid cases and lockdowns have threatened to stall the country’s nascent economic recovery.
“Provided the pandemic can be contained quickly, GDP (gross domestic product) growth could still be around 10% in 2021-22 and 8% in 2022-23, with pent-up consumer demand, easy financial conditions and strong external market growth helping the recovery to gain momentum," OECD, the 38-member intergovernmental organization, said in its economic outlook.
The world economy is now experiencing diverging fortunes after being uniformly battered by the pandemic last year, it added. Most advanced economies and some emerging economies are witnessing a strong recovery, while the rest of the world, including India, has fallen behind. The second wave of the pandemic has hit India hard, with statewide lockdowns stalling economic activity. Though the second wave is officially in decline, the virus is spreading to the hinterlands, pushing the economic recovery to uncharted territory. Most professional forecasters have slashed their growth projections for India to below 10% for FY22, with JP Morgan and Barclays paring it to 9% and 9.2%, respectively.
“The dramatic infections upsurge since February has weakened the nascent recovery and may compound financial woes of corporates and banks. As public anxiety over the virus spreads and lockdowns multiply, high-frequency indicators suggest a marked slowdown may have taken place in April-June, although the overall annual impact may be muted," OECD said.
While India is projected to be the fastest-growing G20 economy in 2021, it will also be the one that is the furthest away from its pre-crisis gross domestic product (GDP) trend, OECD said. “Pent-up demand for consumer durables and exports of manufacturing goods and services will act favourably, but other components will be far less supportive," it said.
