Economic activity in India is picking up with gradual easing of restrictions and there could be further upside to growth as economies around the world reopen, according to Moody's Investors Service, which recently retained the country’s growth forecast for 2021 at 9.6 per cent and 7 per cent for 2022 in its August update to Global Macro Outlook 2021-22.
"In India, economic activity is picking up alongside a gradual easing of restrictions that were implemented in response to the second wave. And there is further upside to growth as economies around the world progressively reopen," Moody's said.Economic activity in India is picking up with gradual easing of restrictions and there could be further upside to growth as economies around the world reopen, according to Moody's Investors Service, which recently retained the country's growth forecast for 2021 at 9.6 per cent and 7 per cent for 2022 in its August update to Global Macro Outlook 2021-22.#
The rating agency said it expects the Reserve Bank of India to maintain an accommodative policy stance until economic growth prospects ‘durably improve’.
"We expect the RBI .... to maintain the status quo until the end of this year. We expect to see an increasing number of emerging market central banks shift to a neutral policy stance amid their gathering growth momentum later this year and early next year," Moody's said.
The Indian economy contracted by 7.3 per cent in the 2020-21 fiscal. Moody's had in June projected a 9.3 per cent gross domestic product (GDP) growth for the current fiscal ending March 2022.
It said the rapid global spread of the highly contagious delta variant of the coronavirus is a stark reminder that the global pandemic is far from over, although some vaccines appear to be highly effective at suppressing the severe disease, reducing the need for hospitalisations and lowering the incidence of fatalities.
Vaccination rates, the extent of serious infections and mobility restrictions remain the key determinants of where countries find themselves in their economic recovery cycle, it said, adding while the spread of the delta variant has prompted mobility restrictions in Asia, renewed lockdowns are far less likely in other regions of the world.
Moody's estimates that the G-20 economies will grow by 6.2 per cent in 2021, after a 3.2 per cent contraction last year, followed by 4.5 per cent growth in 2022.
G-20 advanced economies will grow by 5.6 per cent collectively in 2021 while emerging markets will collectively expand by 7.2 per cent in 2021, it added.
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