Inflation replaces COVID shock as main risk factor for India
The Japan Center for Economic Research and the Nikkei conducted the 24th Quarterly Consensus Survey of Asian Economies.
In India, economists identify inflation as the biggest risk, according to the survey.
Tirthankar Patnaik, chief economist at India’s National Stock Exchange, says “Inflationary pressures persist amid rising commodity prices and persistent bottlenecks on the supply side. country again imposing restrictions “.
Inflation forecasts are relatively calm in Asian economies except India, the survey adds.
US monetary policy risks are ranked second in Malaysia and third in India. India’s Dharmakirti Joshi CRISIL agrees, saying that “faster than expected normalization of US monetary policy could affect global risk sentiment, triggering capital outflows from emerging markets like India” .
Economists predict that the currencies of Indonesia, India and the Philippines will depreciate around 2022.
Asian countries have kept interest rates low, cutting interest rates to stimulate the economy since the start of the Covid-19 pandemic, but now they will look to raise rates while watching for rising rates. the Fed and their own currency trends. Economists predict that India, Indonesia, Malaysia and the Philippines will start raising their key interest rates in 2022.
A generalized optimism distinguishes this survey from the last seven surveys, pessimistic since the start of the pandemic in January 2021.
India’s growth rate in FY2021 (2021/2022) rose to 9.5%, up 0.1 point.
Economists expect GDP levels to return to pre-pandemic (2019) levels in Indonesia, Singapore and India in 2021, the Philippines and Malaysia in 2022, and Thailand in 2023.
Respondents to the survey for India included Punit Srivastava, Research Manager, Daiwa Capital Markets India; Dharmakirti Joshi, Chief Economist, CRISIL; Tirthankar Patnaik, Chief Economist, National Stock Exchange of India; Jyoti Vij, Deputy Secretary General, Federation of Indian Chambers of Commerce and Industry (FICCI); Bidisha Ganguly, Chief Economist, Confederation of Indian Industry; Rahul Bajoria, Director, Regional Economist, Barclays Bank; Aurodeep Nandi, Indian economist, Nomura India; Sonal Varma, Chief Economist for India, Nomura India.
According to the survey, India has returned to normal with weaker momentum. Given a drastic drop in Covid-19 cases since July, India’s GDP growth rate forecast for 2021 is revised up 0.1 percentage point to 9.5%, and the GDP is expected to return to its pre-pandemic level.
In 2022, the rate should be 7.5%, a downward revision of 0.2 points, but we can say that it remains solid.
Nomura India economists Sonal Varma and Aurodeep Nandi say: “Looking ahead, the outlook is more mixed, with improved mobility, but supply-side bottlenecks are slowing production alongside signs of weak demand for mass consumer goods.
Still, they “expect further economic normalization over the next few quarters, albeit with weaker momentum.”
Dharmakirti Joshi, chief economist at CRISIL, gives his point of view: “After contracting in the first quarter of this fiscal year, economic activity rebounded strongly in the second quarter, as the increase in immunization coverage made it possible to ” relax the restrictions linked to the pandemic. Even though government exports and CAPEX continue. To support growth, maintaining the growth dynamic depends on private consumption, the recovery of which remains gradual.