Bloomberg poll raises India's GDP growth forecast amid fewer Covid curbs

India’s economy is seen expanding a notch quicker than previously forecast in the current fiscal year ending March, according to a Bloomberg survey.
 

Gross domestic product will likely expand 9.4% this fiscal, according to the median estimates of the latest survey. That’s faster than 9.3% forecast last month and is mainly due to an upward revision to the third- and fourth-quarter estimates to 6% and 5.8% from 5.8% and 5.3%, respectively.

That coincides with economic activity picking up in Asia’s third-largest economy, which has shrugged off most curbs put in place to stem a deadly second wave of coronavirus infections. While there are no new strict restrictions in place to check the omicron variant, policy makers have retained an accommodative stance to support the recovery.

“The 3Q results underline India’s ability to shrug off the negative impact of the second wave in 2Q relatively quickly,” said Wouter van Eijkelenburg, an economist at Rabobank. “We continue to see an upward trend in mobility among the Indian population which we expect to translate into higher private consumption going forward. The service sector will probably be the main beneficiary as a result of lower government imposed restrictions.”

In the meantime, record high November wholesale-prices at 14.23% are estimated to ease to 13.46% in December. However, longer term FY 2022 and FY 2023 forecasts were raised to 12% and 6.5% compared to previous month’s 10.4% and 4.75%.

“Persistently high core inflation complicates the RBI’s monetary policy making at the time of nascent economic recovery,” said Tuuli McCully, head of Asia-Pacific economics at Scotiabank. “While monetary policy is set to stay growth-supportive in the near term, we assess that inflationary pressures and financial stability considerations will prompt the RBI to commence a cautious monetary normalization phase by mid-2022.”