The United Nations said that India’s economy is expected to grow at 7.2 percent in 2021, although it may decelerate in the following year.
A report by the United Nations Conference on Trade and Development (UNCTAD) forecasted a four-year high growth rate for India’s economy, rebounding from last year’s 7 percent contraction.
The forecast was supported by India’s momentum of positive growth in the second half of 2020 from increased government spending, with the economy rising by 1.9 percent in the first quarter of 2021.
However, UNCTAD cautioned that the severity of India’s second wave of COVID-19 infections, where daily cases exceeded 400,000, along with slow vaccination rollout have made the country’s recovery fragile.
“Given the inherent fragilities in coping with the pandemic and restoring employment and incomes, growth in 2021 as a whole is estimated at 7.2 percent, insufficient to regain the pre-Covid-19 income level,” the report said.
India’s food prices have been inflating by up to 6 percent since mid-2021 and is likely to hurt buyer sentiment in the following months.
Assuming that India does not experience another severe wave of COVID-19 infections, UNCTAD expects slower growth of 6.2 percent in 2022.
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