OECD cuts India’s growth forecast for fiscal 22 to 9.9%
The Organization for Economic Co-operation and Development (OECD) on Monday reduced India’s growth projection for FY22 to 9.9%, from an estimated 12.6% in March, as a resurgence of covid cases and lockdowns threatened to block 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, financial conditions easy and strong growth in the external market. recovery to gain momentum, ”said the OECD, the 38-member intergovernmental organization, in its economic outlook.
The global economy is now in divergent fortunes after being uniformly battered by the pandemic last year, he added. Most advanced economies and some emerging economies are experiencing strong recovery, while the rest of the world, including India, has fallen behind. The second wave of the pandemic hit India hard, with statewide lockdowns blocking economic activity. Although the second wave is officially in decline, the virus is spreading to the hinterland, pushing the economic recovery into uncharted territory. Most professional forecasters cut their growth forecast for India to less than 10% for FY22, with JP Morgan and Barclays cutting them to 9% and 9.2%, respectively.
“The dramatic upsurge in infections since February has weakened the nascent recovery and could worsen the financial difficulties of businesses and banks. As public concern over the virus spreads and lockdowns multiply, high-frequency indicators suggest that a marked slowdown may have occurred in April-June, although the overall annual impact may be mitigated. ” , said the OECD.
While India is expected to be the fastest growing G20 economy in 2021, it will also be the one furthest from the trend in its pre-crisis gross domestic product (GDP), the G20 said. OECD. “The pent-up demand for durable consumer goods and exports of manufactured goods and services will act favorably, but other components will be much less favorable,” he said.
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