India’s economy is expected to recover early next year from recession, but at a modest pace, according to a majority of economists in a Reuters poll who said their upgraded growth predictions were based on the progress of COVID-19 vaccines.
The recent vaccine news has boosted Indian stocks to repeated record highs and fuelled hopes of a pick-up in economic activity. That, coupled with festive-led demand, has lifted optimism among economists over the past month.
Nearly two-thirds of respondents, 26 of 40, to an additional question said their growth views, which have been raised from a month ago, were based on that vaccine progress.
“We expect growth recovery to strengthen…helped by continued normalisation in economic activity as incoming COVID-19 data remain benign and do not require large-scale shut-downs,” said Upasana Chachra, chief India economist at Morgan Stanley. “We also assume vaccine availability in Q1 2021 would help reduce the tail risks and accelerate the pace of opening up of the economy.”
The November 18-25 poll of nearly 50 economists showed the economy would contract in the July-Sept and Oct-Dec quarters by 8.8 per cent and 3 per cent, respectively, but less than the -10.4 per cent and -5 per cent predicted last month.