Advertisement

  • News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

India's economy poised for recovery supported by vaccine rollout: Fitch

India's economy poised for recovery supported by vaccine rollout: Fitch

Photo Credit :

New York [USA], January 11 (ANI): Fitch Ratings expects India's economy to contract by a record 9.4 per cent in the current fiscal year ending March 2021 (FY21) amid the shock from coronavirus pandemic but this represents a 1.1 percentage point improvement from its our previous forecast, reflecting a stronger-than-anticipated rebound in 3Q 2020.
Risks to the growth outlook appear to have eased in recent weeks as vaccine rollouts began in other parts of the world. Fitch said forward-looking indicators suggest gathering momentum in the domestic economy, supporting its forecast that output will grow by 11 per cent in FY22.
"Base effects after a record 9.4 per cent contraction in FY21 should underpin a return to growth of 11 per cent in India's economy over FY22, supported by the rollout of vaccines," said Senior Director Duncan Innes-Ker.
The latest wave of COVID-19 cases in the United States, Europe and parts of Asia has led to renewed restrictions on activity, highlighting the continued risks to growth posed by the pandemic.
"The number of newly identified cases per day continues to trend lower in India, but it remains high and a successful vaccine rollout will be important to sustain economic recovery," he said.
Fitch said India is unusual among emerging markets in having secured pre-orders of various vaccines sufficient to cover a population-wide programme. It has pre-ordered 1.6 billion vaccine doses, including 500 million of the Oxford/AstraZeneca vaccine through a local producer.
Distribution should allow social distancing restrictions to be eased over time and will underpin sentiment.
Nevertheless, said Fitch, the logistical challenges of the rollout mean that one does not expect vaccines to reach a majority of the population over the next 12 months and regional shutdowns will remain a risk in the next few months while the virus is still spreading.
More structural problems with the vaccination drive like delays beyond baseline assumptions or issues with vaccine efficacy could also pose downside risks to the forecasts.
Even if vaccination proceeds smoothly, the coronavirus recession has inflicted severe economic scarring. The need to repair balance sheets, increased caution about long-term planning and company closures will dampen corporate investment in the months ahead.
Furthermore, said Fitch, increased financial-sector weakness -- amid deteriorating asset quality -- will hold back credit provision. The failure of Lakshmi Vilas Bank in November underlined the challenges in financial sector. (ANI)

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


ANI

ANI

More From The Author >>