Online marketplaces too say sales have shot up 10-15% in recent days. (Representational Image)
Online marketplaces too say sales have shot up 10-15% in recent days. (Representational Image)

World bank slashes GDP forecast, but there’s a silver lining

Consumer and FMCG companies are reporting robust sales of laptops, smartphones, microwaves and kitchen appliances.

India’s GDP growth forecasts have been doing a yo-yo in tandem with the changing fortunes of the country’s fight against the Covid-19 pandemic. On Tuesday, the World Bank slashed India’s GDP forecast for financial year 2022 to 8.3 per cent, down from its earlier estimate of 10.1 per cent. The international lender said the sweep of the second wave of the virus had sharply damaged the economic rebound. The pandemic, it said, will continue to undermine consumption and investment in India as “confidence remains depressed and balance sheets damaged”. Earlier, on April 1, before the second wave broke, the World Bank had raised its forecast for FY22 to 10.1 per cent, substantially higher than the 5.4 per cent it had projected in January. However, the lingering effect of the pandemic has now also pushed down its forecast for the following fiscal—FY2023—to 7.5 per cent.

The Reserve Bank’s growth estimates too have been changing. In its latest forecast, the RBI on June 4 had revised its GDP growth estimate for FY22 to 9.5 per cent from 10.5 per cent earlier. Significantly, India performed worse compared to its neighbours and thus has a lot of catching up to do. For FY2021, while India has contracted by 7.3 per cent, Bangladesh has bounced back with a growth of 3.6 per cent and Pakistan will register a GDP growth of 1.3 per cent, according to the World Bank’s latest ‘Global Economic Prospects’.

But there seems to be some light at the end of the tunnel. The Bank has lauded India’s policy shift in this year’s Budget “toward higher expenditure targeted at healthcare and infrastructure to boost the post-pandemic recovery”. It has however said this may require further support, considering the high health and economic costs. Besides this, there has been a sharp decline in Covid-19 infections and deaths, prompting many regions and cities to open up ahead of schedule. As a result, pent-up demand has burst, creating a wave of consumption. Consumer and FMCG companies are reporting robust sales of laptops, smartphones, microwaves and kitchen appliances. Online marketplaces too say sales have shot up 10-15 per cent in recent days. The bounce-back has been faster than expected, and this bodes well as GDP growth forecasts can perhaps see an upgrade very soon.

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