NEW DELHI: The current wave of Covid-19 may slow down the economic activities in the fourth quarter further impacting the overall GDP growth in the financial year 2021-22.
Several rating agencies and analysts have already revised downwards the GDP growth in the current financial year by 50-100 basis points as daily new Covid cases touch the 100,000 mark in India.
Brickwork Rating in a statement on Thursday said that it is revising the GDP estimates for the current fiscal to 8.5%-9% as against its earlier estimate of 10%.
India Ratings has also revised the GDP growth rate downwards by 10 basis points from 9.4% to 9.3%. Rating agency ICRA also sees ‘a modest downside’ to its forecast of FY22 GDP growth of 9.0%.
Brickwork Rating says that the fresh restrictions to contain the virus spread may further dampen the recovery in contact-intensive sectors, and supply disruptions and the shortage of semiconductors may continue to adversely impact the manufacturing sector output.
“The latest data on the manufacturing and services Purchasing Managers Index (PMI) also signals a slowdown in December with the Composite PMI output index falling to 56.4 from 59.2 in November 2021. The slowdown in eight core sectors’ growth in November at 3.1%, which is the lowest in the current fiscal, and IIP growth at 3.2% for October 2021, also does not infuse much confidence,” says the rating agency in a statement.
India Ratings says GDP growth in the fourth quarter will now come in at 5.7%, 40 basis points lower than the agency’s earlier estimate of 6.1%.
For the entire financial year it expects the GDP to clock a growth rate of 9.3%, 10bp lower than its earlier estimate of 9.4%.
“Curbs in various forms such as reducing the capacity of market/market complexes and night/weekend curfews to check human mobility/contact have already started in several states which are impacting economic activities,” it says..
Modest downward risk to GDP growth
Though rating agency ICRA feels that the impact of an Omicron wave may be limited to one quarter, it feels that there continues to be a lot of uncertainty around this.
It, therefore, sees a modest downward risk to the full-year GDP growth rate