S&P Reduces India’s GDP Growth Forecast To 9.5%
- ByStartupStory | June 24, 2021
S&P Global Ratings has made amendments in its GDP growth forecast for India to 9.5 percent for the fiscal year ending March 31, 2022, due to a severe Covid-19 pandemic wave. It had earlier projected a growth rate of 11 percent.The Indian economy contracted by 7.3 percent in fiscal 2020-21 as the country battled the first wave of Covid-19 as against a 4 percent growth in 2019-20.
The Reserve Bank of India has also cut the growth forecast from 10.5 percent to 9.5 percent for the current fiscal as estimated earlier.However, S&P said the Asia Pacific region’s recovery is mostly on track. Early stumbles during the vaccine rollout are giving way to redoubled efforts to vaccinate and open up. “The constraint remains domestic demand, especially private consumption,” said Shaun Roache, Asia Pacific’s chief economist at S&P Global Ratings. “External demand is robust and this has helped lift manufacturing investment.”
However, exports are contributing to some upward revisions to our growth forecasts, he further added. An improvement is expected in the next few quarters depending upon the pace of vaccine rollout. S&P’s expectation is that reaching key vaccination thresholds — especially the 70 percent level identified by the World Health Organization — will determine how quickly consumption rebounds.
S&P said gaps between activity and the pre-pandemic trend also suggest that the rise of inflation across the region is for the most part transitory.
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