24.06.2021, 08:20

Moody's cuts down India's growth forecast post 2nd COVID-19 wave

Moody's cuts down India's growth forecast post 2nd COVID-19 wave

A health worker administers a dose of COVID-19 vaccine to a man at a hospital in Lucknow of India's Uttar Pradesh on June 23, 2021. India's COVID-19 tally surpassed the 30 million mark and the death toll crossed 390,000, said the federal health ministry. The tally rose to 30,028,709 and the aggregate death toll reached 390,660. (Source: Xinhua)   

Global credit rating agency Moody's on Wednesday cut down India's growth forecast for 2021 to 9.6 percent from the earlier projection of 13.9 percent, after the second COVID-19 wave battered the country's economy in April-May this year.

In one of its latest reports, it said that faster vaccination would be paramount in restricting economic losses to the April-June quarter.

It further stated that high-frequency economic indicators showed that the second wave of COVID-19 infections hit India's economy in April and May. With states now easing restrictions, economic activity in May is likely to signify the trough, added the report.

The virus resurgence adds uncertainty to India's growth forecast for 2021. However, it is likely that the economic damage will remain restricted to the April-June quarter, Moody's said, adding "We currently expect India's real gross domestic product (GDP) to grow at 9.6 percent in 2021 and 7 percent in 2022."

It further forecasted that mobility and India's economic activity will likely accelerate in the second half of the year as the pace of vaccinations picks up. The government recently announced a strategy to centralize vaccine procurement in order to boost vaccinations, which if successful, will support the economic recovery, according to Moody's report.

It also said that the overall economic effect of the second wave would be softer than that during the first wave of the pandemic last year, "although delivery of and access to vaccines will determine the durability of the recovery."