Citi has Reduced India’s GDP Growth Rate

Omicron is rapidly expanding its footprint in India. This is hurting the growth prospects of the economy, though marginally compared to previous waves. Economists including Citigroup Inc, India Ratings and Research Pvt and ICICI Bank Ltd have lowered their GDP estimates. The rating agency has lowered its forecast of real GDP for FY22E to 9 per cent from 9.8 per cent.

“Even though the economic impact of the Omicron wave in 4QFY22 may be much less than in previous waves, the pace of activity in 3QFY22 was much lower than we expected,” Citi said.

The third Covid-19 wave has started in India. Daily new cases of coronavirus in the South Asian nation have risen from 6,500 to more than 170,000 in two weeks. The rating agency wrote, “This time includes lower hospitalization rates, shorter COVID wave cycle periods, higher vaccination coverage and a weaker link between Covid-19 and economic activity.”

Others at BofA Securities Inc. and Deutsche Bank AG retained their projections for now. Economists led by Aastha Gudwani at BofA wrote in a report on January 10, “Some negative impact on activity is possible, but the rebound could be relatively rapid.” Downside risks are increasing, but it is too early to quantify.

Reviewer overview

Citi has Reduced India's GDP Growth Rate - /10

Summary

Omicron is rapidly expanding its footprint in India. This is hurting the growth prospects of the economy, though marginally compared to previous waves

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