India economic forecast: Could there be light at the end of this tunnel? has been saved
India economic forecast: Could there be light at the end of this tunnel?
Based on recent data and signals, we decided to update our scenarios and projections for the medium term. These scenario projections are ways to anticipate probable outcomes and keep our eyes on the road ahead. As the economy swings between good and bad news, we are optimistic and expect India’s GDP to rebound in double digits in FY2022. Reducing infection, lowering fatality rates, and the possibility of releasing several highly effective vaccines could improve consumer confidence. The pent-up demand for more elastic discretionary goods, especially among the top 10 income percentile of the population, may spur private investment that has been contracting for five consecutive quarters now. The lagged buoyancy impact of government spending could further boost the economic recovery.
That said, despite a quicker rebound, the output levels will likely remain below the pre-pandemic GDP levels during our entire forecast period, which is until FY2023. Prices are expected to ease till mid-2021 because of low demand and low supply equilibrium. However, as soon as the infection rates are under control, we expect demand to overshoot supply quickly, leading to demand-pull inflation.