World Bank slashes growth forecast to 8.3%

New Delhi (TIP): The World Bank has  slashed its FY22 growth forecast for India to 8.3% from the 10.1% pace it estimated in April, as an economic rebound in the early part of this year collapsed amid a devastating resurgence of coronavirus infections in Asia’s third-largest economy.

“In India, the second Covid-19 wave is undermining the sharper-than-expected rebound in activity seen during the second half of FY2020/21, especially in services. With surging cases, foot traffic around work and retail spaces has again slowed to more than one-third below pre-pandemic levels since March, in part due to greater restrictions on mobility,” World Bank said in its latest Global Economic Prospects report.

Economic activity in FY22 will benefit from policy support, including higher spending on infrastructure, rural development, and health, and a stronger-than-expected recovery in services and manufacturing, the World Bank said. “Activity is expected to follow the same, yet less pronounced. The pandemic will undermine consumption and investment as confidence remains depressed and balance sheets damaged. Growth in FY2022/23 is expected to slow to 7.5% reflecting lingering impacts on households, corporate and bank balance sheets; possibly low levels of consumer confidence; and heightened uncertainty on job and income prospects,” it added.

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