expected at 1% growth over one year
Covid-19 vaccination campaign at government health center during Covid-19 emergency in Calcutta, India, May 3, 2021. Pfizer in talks with India on expedited approval of Covid-19 vaccine according to an Indian media report.
Indranil Aditya | NurPhoto | Getty Images
India’s economy is expected to improve in the three months that ended in March, but analysts have lowered growth expectations for the current quarter that ends in June.
It comes as India continues to grapple with a devastating second wave of the coronavirus outbreak.
Gross domestic product for the period January to March – India’s fourth fiscal quarter – is due around noon GMT on Monday. The Indian fiscal year begins in April and ends in March of the following year.
Reuters reported that the economists polled had a median forecast for annual growth of 1% for the March quarter – down from 0.4% in the previous quarter. However, economists are less optimistic about the current quarter ending in June.
The median growth forecast for the three months from April to June is 21.6%, down from an earlier estimate of 23%, Reuters reported. For the full year 2022, the median forecast is down from a previous estimate of 10.4% growth to an expansion of 9.8%.
India is the second most infected country in the world behind the United States. It has reported over 28 million cases and over 329,000 deaths.
The expected growth rate for the March quarter “will be a cold comfort for India, which has retreated as the re-emergence of COVID has forced another wave of downturns in activity,” wrote Lavanya Venkateswaran, an economist at the Mizuho Bank, in a note from Monday.
The focus will be on how India manages to get its economy back on track in the second half of the calendar year after the expected setback in the current quarter, said Venkateswaran.
She added that the greatest concern is the scarring effects on the country’s informal economy and the banking sector which was already limited in capital and burdened with underperforming assets.
India’s Covid-19 cases began to climb in February and the daily infection rate accelerated in April and May, peaking of more than 414,000 cases on May 7. The second wave forced most of India’s industrial states to implement localized lockdown measures to slow the spread of the virus.
Although cases have reached record levels, reported daily number less than 200,000, rapid transmission raises concerns in rural India, where experts say health care infrastructure is poorly equipped to cope with an increase in the number of patients.
The second half of the year is crucial for India to strengthen its vaccination program against Covid-19 and minimize the impact of a likely third wave of infections, economists said.
“At the end of the day, it’s about vaccinations,” Frédéric Neumann, co-director of Asian economics research at HSBC, told CNBC. “Squawk Box Asia“Monday.” We need to achieve a critical vaccination level, a vaccination level, in India to stabilize the epidemic – and that is essential for economic growth. “
Neumann added that based on trends seen last year, India’s economy tends to rebound quickly once virus cases peak. He said he expects the situation to improve by the end of the September quarter.
According to Kaushik Das, chief economist for India and South Asia at Deutsche Bank, a robust vaccination campaign may also reduce the risks of a possible downgrade in India’s sovereign ratings, which has become a concern. among investors.
Rating agencies said they see no imminent change to sovereign ratings of India at this time. They expect the economic fallout from the second wave to be limited to the June quarter and predict that it is unlikely to be as bad as it was last year, when India put in place a multi-month nationwide lockdown.