The Indian economy may revive and retake its place as the fastest growing one in 2021, says the forecast released by the Organisation for Economic Cooperation and Development (OECD) on March 9.
India’s gross domestic product (GDP) is projected to jump by 12.6 percent during FY21-22, CNN reported.
This is especially significant as India experienced recession for the first time in 25 years during FY20-21, largely due to the COVID-19 pandemic.
If the projected growth is “realised” it could allow India to “reclaim its status as the fastest growing major economy from China,” the report said. OECD experts feel China will grow by 7.8 percent this fiscal, after narrowly escaping recession last fiscal.
Signs of revival are already there as India recorded a 0.4 percent GDP rise in October-December 2020, which marked the “end of recession” for the country, it added. India’s economy shrank by 7 percent overall in 2020.
Further in its report, the OECD noted “marked improvement” in global economic prospects over the recent months – largely due to vaccination drives and stimulus announcements. It also said that recent coronavirus containment measures were “not hurting the economy as much as earlier efforts.”
"This may reflect a more careful targeting of public health measures and income support. Businesses and consumers have adapted to the restrictions," the group said.
Globally the OECD expects 5.6 percent growth in 2021, compared to its December 2020 estimate of 4.6 percent growth. It also expects the United States to grow by 6.5 percent this year compared to the earlier projected 3.5 percent growth.
In countries using Euro currency, the OECD expected output to expand by 3.9 percent with “a more gradual upturn.” For the United Kingdom it expects growth of 5.1 percent.
The overall outlook however is still “highly uncertain” as vaccination programmes move at “different speeds around the world” and there are chances that the new mutations could resist available vaccines, it added.
It also acknowledged price pressures and inflation. "A faster-than-expected recovery in demand, especially from China, coupled with shortfalls in supply, has pushed up food and metals prices considerably, and oil prices have rebounded to their average level in 2019," it said.
It, however, maintained that central bank measures would be crucial as “transitory factors that push up headline inflation do not warrant changes in the policy stance.”