Moody’s cuts India’s growth forecast for 2021 to 9.6 percent
Moody’s Investors Service on Wednesday slashed India’s growth forecast for the 2021 calendar year to 9.6 per cent from its earlier estimate of 13.9 per cent, and said rapid vaccination progress was paramount in limiting economic damage in the June quarter. Will be In its report titled ‘Macroeconomics – India: Economic shocks from second COVID wave will not be as severe as last year’, Moody’s said high-frequency economic indicators suggest that the rate of COVID-19 infection The second wave hit India’s economy in April and May.
With states now easing restrictions, economic activity in May may indicate a trough.
“The resurgence of the virus adds uncertainty to India’s growth forecast for 2021; however, it is likely that the economic damage will be limited to the April-June quarter. We are currently projecting India’s real GDP at 9.6 per cent and 7 per cent in 2021 expect to grow in 2022,” Moody’s said.
Earlier this month, Moody’s had forecast India to register 9.3 per cent growth in the current fiscal ending March 2022, but a severe second COVID wave raised risks to India’s credit profile and rated entities is.
The Indian economy contracted by 7.3 per cent in FY 2020-21 as the country battled the first wave of COVID, as against 4 per cent growth in 2019-20.
Tighter lockdowns in economically important states will impact economic activity for the April-June quarter, Moody’s said, adding that the 10 states worst hit by the second wave would collectively hit pre-pandemic levels of India’s GDP. of more than 60 percent.
Four states – Maharashtra, Tamil Nadu, Uttar Pradesh and Karnataka – contributed the largest shares among all states in the financial year 2019-20.
Moody’s said rapid vaccination progress will be of paramount importance to prevent economic losses in the current quarter. By the third week in June, only about 16 percent of the population had received a single vaccine dose; Of them, only 3.6 percent were fully vaccinated.
“Mobility and economic activity are likely to pick up in the second half of the year as the pace of vaccination picks up. The government recently announced a strategy to centralize vaccine procurement to boost vaccination, which is likely to be successful. But will support economic recovery.” added this.
Moody’s expects the overall impact on India’s economy to be softer than last year’s first wave.
However, the speed of recovery will be determined by the strength of recovery in access and distribution of vaccines, and in private consumption, which loss jobs, income and wealth to low- and middle-income households.
India’s second wave peaked in early May; Since then, new cases and daily deaths have continued to decline, and the number of people recovering from the virus has exceeded the number of new infections since mid-May.
The total number of COVID-19 cases in India has crossed the three crore mark with 50,848 new cases reported in 24 hours.
The death toll rose to 3,90,660 with 1,358 fresh deaths.
“We assess the overall economic impact of the second wave compared to the first wave of the pandemic last year, although the delivery and accessibility of vaccines will determine the sustainability of the recovery,” Moody’s said.
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