Economic Watch: India s economy continues to tumble amid COVID-19 pandemic
Xinhua
by Peerzada Arshad Hamid NEW DELHI, Aug. 3 (Xinhua) As the threat of a third wave of COVID-19 looms large over India, an increasing uncertainty has reduced business and consumer confidence in the country. Apprehension of a severe third wave of the COVID-19 pandemic with the emergence of new and more transmissible variants might necessitate the reimposition of lockdowns, which would lead to a further reduction in growth estimates and further dampen demand. INFLATIONARY PRESSURE Retail price inflation in India remained high at 6.23 percent in June, after its May surge of 6.3 percent. This is the second consecutive month when inflation remained above the Reserve Bank of India (RBI) s comfort zone of 2-6 percent.
The second wave impact has been seen in the GDP forecast put out for India. How big a concern is a potential third wave?
When we were putting out our numbers in April, we had warned that if this were really the beginning of the second wave in India and if that were to rise dramatically and lead to very widespread lockdowns, then that would lead to a downgrade. Those were the risks that were actually realised, which is why we had a 3 percentage point downgrade.
Now to your question of what comes next. We have a very modest recovery put into the numbers and the reason is that unlike after the first wave, we think that this time around the hit to confidence was greater and also because of the uncertainty about what will come next in terms of the pandemic. Both of those will weigh on the recovery. So, we have a fairly modest recovery at this point in our projections.
Expect modest recovery in India due to bruised confidence, uncertainty: Gita Gopinath
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Last Updated: Jul 29, 2021, 01:24 PM IST
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Synopsis The vaccine divide is a big part of the story behind the great divergence that we are seeing in different parts of the world. In the case of India, vaccination started out slow.
Gita Gopinath sees a modest recovery for India; cautions on speed of vaccination drive and inflation
We have a very modest recovery put into the numbers and the reason is that unlike after the first wave, we think that this time around the hit to confidence was greater and also because of the uncertainty about what will come next in terms of the pandemic, said
Updated Jan 28, 2021 | 12:03 IST
IMF Chief Economist Gita Gopinath tells ET Now in an exclusive interview that while India s return to economic activity has been faster than expected, a return to pre-pandemic growth is still a long way to go. IMF Chief Economist Gita Gopinath
Key Highlights
Gita Gopinath, IMF Chief Economist says recovery in activity has been better than anticipated
However India will still be 9% below pre-pandemic growth by 2022
The International Monetary Fund in its January World Outlook Report underlined what the statistics have been showing, that India s economic recovery in the third quarter of this financial year has been better than expected. As a result, the GDP contraction for 2020 has been revised to 8 per cent and the growth for 2021 upgraded to 11.5 per cent.