In its report titled “Macroeconomics – India: Economic shocks from second COVID wave won’t be as severe as last year’s, Moody’s said high-frequency economic indicators show that the second wave of COVID-19 infections hit India’s economy in April and should . With states now easing restrictions, economic activity in May is probably going to suggest the trough.
Moody’s Investors Service on Wednesday slashed India’s growth projection to 9.6 per cent for 2021 civil year , from its earlier estimate of 13.9 per cent, and said faster vaccination progress are going to be paramount in restricting economic losses to June quarter
In its report titled “Macroeconomics – India: Economic shocks from second COVID wave won’t be as severe as last year’s, Moody’s said high-frequency economic indicators show that the second wave of COVID-19 infections hit India’s economy in April and should . With states now easing restrictions, economic activity in May is probably going to suggest the trough.
“The virus resurgence adds uncertainty to India’s growth forecast for 2021; however, it’s likely that the economic damage will remain restricted to the April-June quarter. We currently expect India’s real GDP to grow at 9.6 per cent in 2021 and seven per cent in 2022,” Moody’s said.
Earlier this month, Moody’s had projected India to clock a 9.3 per cent growth within the current fiscal ending March 2022, but a severe second COVID wave has increased risks to India’s credit profile and rated entities.
Indian economy contracted by 7.3 per cent in fiscal 2020-21 because the country battled the primary wave of COVID, as against a 4 per cent growth in 2019-20.
Stating that stringent lockdowns in economically significant states will mar April-June quarter economic activity, Moody’s said the ten states that are hardest hit by the second wave collectively account for quite 60 per cent of the pre-pandemic level of India’s GDP.
Four states – Maharashtra, Tamil Nadu , Uttar Pradesh and Karnataka – contributed the most important shares among all states in fiscal year 2019-20.
Moody’s said faster vaccination progress are going to be paramount in restricting economic losses to the present quarter. As of the third week in June, only about 16 per cent of the population had received one vaccine dose; of these , only about 3.6 per cent had been fully vaccinated.
“Mobility and economic activity will likely accelerate within the last half of the year because the pace of vaccinations devour . the govt recently announced a technique to centralise vaccine procurement so as to spice up vaccinations, which if successful, will support the economic recovery,” it added.
Moody’s expects the general hit to India’s economy to be softer than that in the primary wave last year. However, the pace of recovery are going to be determined by access to and delivery of vaccines, and therefore the strength of the recovery privately consumption, which might be hampered by the deterioration of balance sheets of low- and middle-income households from job, income and wealth losses.
India’s second wave peaked within the beginning of May; since then, new cases and daily deaths have continued to fall, and therefore the number of individuals who have recovered from the virus has exceeded the amount of latest infections since mid-May.
India’s total tally of COVID-19 cases crossed the three-crore mark with 50,848 new cases reported in 24 hours. The price climbed to three ,90,660 with 1,358 fresh fatalities.
“We assess the general economic effect of the second wave to be softer than that in the primary wave of the pandemic last year, although delivery of and access to vaccines will determine the sturdiness of the recovery,” Moody’s added.
