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S&P Global Ratings lowered its growth forecast for Asia-Pacific to 6.7 percent this year from 7.5 percent, citing persistent COVID-19 waves and weak growth prospects. The ratings agency cut the forecasts for China and South-East Asia emerging markets, but left the 2021 gross domestic product (GDP) growth estimate for India unchanged.
Separately, ICRA, a Moody's Investors Service affiliate, revised its FY22 GDP growth estimate for India upwards to 9 percent from 8.5 percent, citing better prospects in the second half of the fiscal year.
“The widening coverage of COVID-19 vaccines is likely to boost confidence, which will in turn re-energise demand for contact-intensive services, helping to revive the portions of the economy affected most by the pandemic,” ICRA said in a statement.
Note that S&P Global had cut its India GDP estimate some time ago. Even so, the latest update underscores the strength in India’s economic recovery, especially when compared to its Asian peers. Our Economic Recovery Tracker and the Nomura India Business Resumption index, which analyses weekly data, are indicating decent progress on the economy front.
This is a marked change in outlook from a few months ago when India was reeling under a severe second COVID-19 wave while the rest of the world reopened and saw steady recovery. As of Tuesday morning, India reported 18,795 fresh cases, the lowest in 201 days, adding to the confidence. Perhaps, its experience in the past 15 months is helping India deal with the pandemic better, though the festive season and the coming winter months will put this hypothesis to test.
“The upcoming festive season in Q4 2021 and the release of the arrears of ‘dearness allowance’ for public sector employees, should support consumption, although supply-side bottlenecks may weigh on near-term manufacturing growth,” Nomura Research said in a note.
Talking about economic trends, the latest employment survey released by the government indicates healthy hiring by the technology-related sectors. The survey reinforces the hiring data of technology firms. With demand strong, the aggregate hiring by tier-1 IT services firms in the current fiscal year is set to be the strongest in 10 years, shows an analysis by JM Financial Institutional Securities.
Of course, the employment survey has a low base and does not fully reflect the job situation in India. Read our incisive analysis of the report, free for Moneycontrol Pro subscribers.
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Picks from our technical analysts: Tata Chemical, Tata Motors, Bajaj Auto and Tata Steel (These are published every trading day before markets open and can be read on the app)
R Sree Ram