The tunnel just got longer, but you can still see the light has been saved
The tunnel just got longer, but you can still see the light
The spike in infection during the second wave has made us revisit our economic outlook in our latest report.
The spike in infection during the second wave has made us go back to the drawing board and revisit our economic outlook in our latest economic report titled “The tunnel just got longer, but you can still see the light”. Even as we gradually make our way out of the devastating storm that hit us, the impact on this quarter has been enormous and set back the potential recovery of the economy. While we believe the setback to be momentary, the second wave will likely accentuate the lopsided recovery amongst industries.
As there is low visibility on the way things will pan out over the next few months, we have provided a range of forecast numbers. In the baseline, we expect growth to range between 8.8 percent and 10.4 percent during FY2021–22. Economic activity will likely pick up rapidly in the second half, while its pace will probably get pushed by a couple of quarters and flow into the next fiscal year (FY2022–23). Growth in the following year will be strong; with a significant portion of the population having been vaccinated, successive waves may have a minimal economic impact. Pent-up demand amongst the population segment that has saved for long will come in full throttle. However, inflation may come roaring back after a subdued period due to global factors as well as the impending domestic recovery.