Barclays cuts India’s FY22 GDP estimate to 9.2% on second wave, sluggish tempo of vaccinations


A British brokerage on Tuesday minimize India’s FY22 GDP development estimate by a pointy 0.80 per cent to 9.2 per cent, saying the financial impression of the second wave of infections has been deeper than initially anticipated.

Barclays chief India economist Rahul Bajoria additionally talked about the sluggish tempo of vaccinations within the nation and the rolling lockdowns throughout many states for the estimate.

It may be famous that the final month has seen a slew of comparable forecasts from analysts, even because the RBI maintained its estimate of a 10.5 per cent development in actual GDP. The analysts’ estimates vary from 8.5 per cent to a bit of above 10 per cent. The upper development quantity has been made attainable by a low base of FY21, the place the financial system contracted by over 7.5 per cent.

“Though India’s second COVID-19 wave has began to recede, the associated financial prices have been bigger owing to the extra stringent lockdowns applied to comprise the outbreak… we decrease our FY 2021-22 GDP development forecast an extra 0.80 per cent, to 9.2 per cent,” Bajoria stated.

He stated the general scenario is coming below management regardless that components of the nation are nonetheless experiencing a rise in new instances and this may end up in a gradual reopening of the financial system.

It may be famous that the second wave had witnessed new infections prime Four lakh a day with over 4,500 deaths. Whereas the brand new infections have gone down, the each day deaths – even the reported ones – proceed to be excessive.

Barclays stated the financial prices of the current surge in instances are rising quickly, and added that whereas “fairly steady”, the financial system skilled a pointy decline in exercise in Might as is clear in excessive frequency knowledge.

“Whereas we proceed to consider the lockdowns will final solely till finish of June 2021, in our new base case, we now estimate financial losses of USD 74 billion, all of it contained in Q2 21 (April-June),” the observe stated.

India’s vaccination programme has slowed considerably, given persistent provide constraints and logistical challenges, the British brokerage stated, including the scenario will solely enhance within the September quarter.

“The sluggish vaccination drive might pose medium-term dangers to development, particularly if the nation experiences a 3rd wave of COVID-19 instances,” the brokerage warned.

In what it termed as a “pessimist state of affairs” of a 3rd wave of COVID-19 infections which lead to one other eight weeks of lockdowns, it stated the financial prices will rise and the GDP development will slip additional to 7.7 per cent.

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