India’s economic recovery gathers pace as Omicron looms | Business and Economy News

India’s GDP is expected to strengthen in the July-September quarter, helped by a slight increase in consumer spending.

India is expected to remain on track to post the fastest economic growth among major economies, even as the spread of the Omicron coronavirus variant has raised fears for the future.

The country’s economic recovery is expected to strengthen in the July-September quarter, aided by an increase in consumer spending, with data expected later on Tuesday.

Asia’s third-largest economy has rebounded from last year’s deep recession, spurred by rising vaccination rates and rising government spending.

A Reuters survey of 44 economists predicts GDP data will show 8.4% year-on-year growth in the September quarter, the fastest pace among major economies, from a contraction of 7 , 5% in the same quarter last year.

Projected growth is slower than the 20.1% growth in the previous quarter – which largely reflected a rebound from last year’s crash – but marks a fourth consecutive quarter of expansion.

The recovery is “led by the service sector, with individual mobility back to pre-COVID levels and ultra-accommodative financial conditions,” as well as higher government spending, said Gaura Sen Gupta, economist at IDFC First Bank in Mumbai.

Although she said it was too early to predict the impact of the omicron strain, the cost of blockages has decreased as they become more focused and shorter.

Improving mobility in the workplace has become possible thanks to the government’s extensive vaccination program, said Sunil Sinha, senior economist at India Ratings and Research, in an emailed statement to Al Jazeera. The cumulative number of vaccinations in India rose to 890.21 million at the end of the September quarter, from 335.72 million at the end of the previous quarter, the rating agency said.

Sinha warned, however, that the growth figures should be “interpreted with caution” as growth in the first six months of the current fiscal year was “primarily due to the lower base” of the same period of the year. last.

Rapidly changing indicators including exports, power generation, rail freight and bank deposits showed signs of improving growth momentum in October, while vehicle sales, fuel sales and tax collection showed slower growth.

Airport tests

Private economists said the economy was on the verge of recovery, aided by resilient growth in the agricultural sector, but risks included slowing global growth, rising manufacturing prices as well as new variants of COVID- 19.

As the market waited for the numbers, health officials warned they were tightening testing at airports following the spread of the Omicron variant. Prime Minister Narendra Modi on Saturday ordered a review of plans to ease travel restrictions.

“The risks of COVID have resurfaced globally and (these need to be watched) for implications on the timing of monetary policy normalization,” said Shubhada Rao, economist at Mumbai-based QuantEco Research.

The Reserve Bank of India (RBI), which cut key interest rates to record levels and injected massive liquidity to support the economy, is expected to suck cash before normalizing rates amid inflationary concerns increasing.

RBI has forecast annual growth of 9.5% for the current fiscal year.

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