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Moody’s Investor Service on August 31 retained India’s growth forecast for the 2021 calendar year at 9.6% and 7% for 2022. It noted that economic activity in India is picking up with the gradual easing of Covid restrictions and there could be further upside to growth as economies around the world gradually reopen. The Reserve Bank of India (RBI) is expected to maintain an accommodative policy stance until economic growth prospects durably improve, the ratings agency said.

In 2020-21 fiscal, the Indian economy contracted by 7.3%. Initially, GDP growth in the current fiscal was estimated to be in double digits. However, the second Covid wave of the pandemic has led to a cut in growth projections by various agencies.

Moody’s had in June projected a 9.3% growth for the current fiscal ending March 2022.

It estimated that the G-20 economies will grow by 6.2% in 2021, after a 3.2% contraction last year, followed by 4.5% growth in 2022.

G-20 advanced economies will grow by 5.6% collectively in 2021 while emerging markets will collectively expand by 7.2%  in 2021, it added.

Vaccination rates determine economic recovery

Although some vaccines appear to be highly effective at suppressing the pandemic, reducing the need for hospitalisations and lowering the incidence of fatalities, 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, Moody’s said.

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. The spread of the delta variant has prompted mobility restrictions in Asia.