Photo AFP
Few countries have enjoyed as smooth an economic recovery from covid-19 as India. In the quarter ending in June, its annual growth surged to 13.5% (though it came from an especially low base, thanks to the impact of the pandemic in 2021). This resurgence is, in part, why the IMF predicts that India will ultimately grow 7% in 2022, to displace Britain as the world’s fifth-largest economy. Growth rates are now normalising somewhat. Data released on Wednesday are likely to reveal a much smaller year-on-year expansion of 6.2% for the quarter ending in September, according to economists surveyed by Bloomberg.
The global economic slowdown is hitting India’s exports; manufacturing activity remains sluggish. Interest-rate rises are also beginning to bite with tightening expected to continue until next year (albeit less aggressively). The cooling economy, however, may not be a bad thing. In addition to reining in inflation, currently at 6.8%, economists believe weaker domestic demand could reduce worrisome fiscal and trade deficits.
The above information was published in the Economist magazine.
