India’s Near Term Growth Expected To Be Hit By Third Wave Of Covid-19 Infections

Even though the overall economic impact of the third wave of Covid-19 infections is expected to be less disruptive than prior waves, some economists foresee weaker growth in the short term for the Indian economy.

In a January 9 note, Citi economists Samiran Chakraborty and Baqar M Zaidi predicted that the current wave’s economic impact will be less severe in the first three months of 2022.

They did note out, however, that the pace of India’s economic activity between October and December fell short of forecasts, even before the third wave arrived.

Citi economists revised down their inflation-adjusted GDP predictions for India for the fiscal year 2022 as a result of this. According to Chakraborty and Zaidi, growth will decline by 80 basis points from 9.8% to 9% year on year, owing to weaker economic activity in the October-December quarter.

As a result, they lowered their fiscal 2023 growth forecasts from 8.7% to 8.3% year over year.

The fiscal year 2022 in India finishes in March, and the fiscal year 2023 begins on April 1 and concludes on March 31 the following year.

Covid-19 cases are once again on the rise in India, with daily counts topping 150,000 in recent days.

On Thursday, India reported 247,417 new infections over a 24-hour period, with the daily positivity rate — which counts the percentage of Covid-19 tests that are positive — reaching 13.11 percent, according to government data.

According to the data, there are more than 1.1 million current instances of HIV in the country.

India has so far recognized 5,488 cases of Covid infections caused by the novel, highly contagious omicron form discovered by South African scientists. Because genetic sequencing takes time to determine if a person with Covid contracted the new strain, the number of omicron cases in India is likely to be significantly higher than what has been officially reported thus far.

The delta strain is still the most common in India.

While India’s health system is better prepared to deal with the third wave, a sudden increase in cases might push the country back to the brink.

“Regional variations in access to healthcare personnel, medical facilities, oxygen ventilators, and critical care underscore the need for proactive action before caseloads intensify beyond the metros,” Radhika Rao, a senior economist at Singapore’s DBS Group, said in a Jan. 6 note.

Because the economy has learned to be more resilient, we foresee substantially less economic damage from the current outbreak than from the last two rounds of infections…

The third wave’s effects could deteriorate in the next weeks and months. Thousands of pilgrims are scheduled to converge this week to the Ganges River in West Bengal’s eastern state for an annual festival, according to local media reports.

A similar large-scale religious gathering in February and May last year was partially to blame for the deadly second wave of diseases.

While economists are more apprehensive about the January-March quarter outlook as a result of the steep increase in cases, they are also expecting a less severe impact than before.

“We expect far less economic damage from the current outbreak compared to the first two waves of infections as the economy has adjusted to being more resilient to Covid-related disruptions,” Priyanka Kishore, head of India and Southeast Asia economics at Oxford Economics, wrote in a Jan. 8 note.

(Adapted from EconomicTimes.com)



Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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