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

A British brokerage on Tuesday minimize India’s FY22 GDP progress estimate by a pointy 0.80 per cent to 9.2 per cent, saying the financial influence of the second wave of infections has been deeper than initially anticipated.
Barclays chief India economist Rahul Bajoria additionally talked about the gradual tempo of vaccinations within the nation and the rolling lockdowns throughout many states for the estimate.
It might be famous that the final month has seen a slew of comparable forecasts from analysts, even because the RBI maintained its estimate of a ten.5 per cent progress in actual GDP. The analysts’ estimates vary from 8.5 per cent to just a little above 10 per cent. The greater progress quantity has been made doable by a low base of FY21, the place the financial system contracted by over 7.5 per cent.

“Although India’s second COVID-19 wave has started to recede, the related economic costs have been larger owing to the more stringent lockdowns implemented to contain the outbreak… we lower our FY 2021-22 GDP growth forecast a further 0.80 per cent, to 9.2 per cent,” Bajoria mentioned.
He mentioned the general state of affairs is coming beneath management though elements of the nation are nonetheless experiencing a rise in new instances and this can lead to a gradual reopening of the financial system.
It might be famous that the second wave had witnessed new infections high 4 lakh a day with over 4,500 deaths. While the brand new infections have gone down, the day by day deaths – even the reported ones – proceed to be excessive.
Barclays mentioned the financial prices of the latest surge in instances are rising quickly, and added that whereas “reasonably stable”, the financial system skilled a pointy decline in exercise in May as is clear in excessive frequency information.
“While we continue to believe the lockdowns will last only until end of June 2021, in our new base case, we now estimate economic losses of USD 74 billion, all of it contained in Q2 21 (April-June),” the word mentioned.
India’s vaccination programme has slowed considerably, given persistent provide constraints and logistical challenges, the British brokerage mentioned, including the state of affairs will solely enhance within the September quarter.

“The slow vaccination drive may pose medium-term risks to growth, especially if the country experiences a third wave of COVID-19 cases,” the brokerage warned.
In what it termed as a “pessimist scenario” of a 3rd wave of COVID-19 infections which lead to one other eight weeks of lockdowns, it mentioned the financial prices will rise and the GDP progress will slip additional to 7.7 per cent.