Pandemic biggest risk of delayed recovery for Indian economy: Reuters poll

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FILE PHOTO: People walk through a crowded market in the old city of Delhi in India on April 6, 2021. Reuters / Anushree Fadnavis / File photo

5 October 2021

by Tushar Goenka

BANGALORE (Reuters) – India’s economic recovery from a pandemic-related outage risks further delays in the remaining six months of the year, with inflation expected to sustain or accelerate, according to a Reuters study. Happen. Autumn.

Rising fuel prices in the world’s second most populous country have added to price pressures, but the Reserve Bank of India will raise interest rates from April to June 2022, at least at the beginning of the next financial year. Didn’t expect

The RBI is slightly behind many emerging market peers that are already raising interest rates due to prolonged concerns about growth risks.

“Very liberal monetary policy has prevented the economy from falling off a cliff, but continuation of this policy without adequate financial support has little to do with the pace of recovery of lost growth potential. Will not budge,” said Kunal Kundu Said. Societe Generale.

Polls from 27 September to 4 October showed that Asia’s third-largest economy grew at 7.8%, 6.0% and 5.8%, respectively, in the third, fourth and first quarters of 2022. had predicted. The July survey showed higher forecasts for the third and first quarters of 2022.

It was the highest since the mid-1990s, after a 20.1% increase in the April-June quarter, supported by the very little foundation of the start of the pandemic last year.

The Gross Domestic Product (GDP) growth rate is estimated to average 9.2% this year. In the next fiscal year, we saw growth of 9.7% and 7.1% in the first two quarters and 6.5% and 6.4% in the last two quarters, with an average growth of 7.0% in 2022/23.

These predictions have remained largely unchanged since the July election.

For the rest of the fiscal year, 23 out of 34, or more than two-thirds, of respondents asked for these numbers at higher risk, stating that recovery was delayed and downsides were limited. Rice field. Eight said they had a strong recovery and subsequent upgrade, while the remaining three were weak and were downgraded.

“But inflation is expected to continue to rise… Continuing with ultra-easy monetary policy while the economy recovers could lead to a stalemate and affect recovery,” Kundu said. where did it go.

Opinion polls predicted that inflation would be well above the RBI’s medium-term target of 4%, but would fall below the 6% upper limit by at least the end of 2024.

RBI has voiced intent to help the government boost growth and expressed policy support from all sides prd=52008#:~:text=%20conduct%20of%20monetary%20policy,%20nascent%20and%20hesident%20recovery An initial hesitation is necessary to promote recovery.

“It will take a long time for the fiscal situation to become critical, and it will take even longer before the policy rate increases. Capital Economics Silane Shah said the economy should be close to sound. Sometimes rate hikes will be on the agenda. “

“The big picture is that the policy will still be very favorable for months.”

Despite these uncertainties about the pace of recovery, the Indian stock market doesn’t seem to be bothered as share prices hit record highs repeatedly.

Investors flocked to Indian equities as business and dynamism recovered from the catastrophic second wave of COVID-19 from April to May.

The unemployment situation has also improved and major restrictions have been lifted. An additional 17 out of 27 respondents said there is little or no risk of unemployment rising in the next year. The rest said they were at high risk.

(For other stories from Reuters’ World Economic Survey 🙂

(Reporting by Tushar Goenka, Voted by Vivek Mishra, Shalu Srivastava, Manzar Hussain, Devyani Sathyan, Edited by Ross Finlay and Steve Orlofsky)

Pandemic biggest risk of delayed recovery for Indian economy: Reuters poll

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