ShareNEW DELHI: India's growth rate slowed further in the last three months of 2021, the National Statistics Office said yesterday as it cut its forecast for the current financial year in the face of higher oil prices and geopolitical tensions. Asia's third-largest economy grew 5.4 percent year-on-year in the October to December period, NSO data showed. That was a slowdown from a record 20.1 percent and 8.4 percent in the two previous quarters as a pandemic-induced favorable base effect waned.
The figure was "sorely below our expectations" of 6.2 percent, Aditi Nayar, chief economist of credit ratings agency ICRA, told AFP. The NSO also lowered its growth estimates for the ongoing financial year from 9.2 percent to 8.9 percent. But Nayar said the forecast looked "rather optimistic" given spiking commodity prices and an even larger base effect. COVID pummeled Asia's third-largest economy, which suffered its worst recession since independence in 1947 after a drastic lockdown brought factories and consumer spending to a standstill.
But it has since surged to become the world's fastest-growing major economy, with widespread vaccine coverage and a milder than expected third wave of infections keeping it on track to retain the number one ranking. Last week credit rating agency Moody's forecast 9.5 percent GDP growth in 2022 on a stronger-than-expected economic recovery, a sharp upward revision from 7 percent projected earlier.
"The speed of the recovery from the first lockdown-led contraction in Q2 2020, and subsequently in Q2 2021 during the Delta wave, was stronger than expected, and the economy is estimated to have surpassed the pre-COVID level of GDP by more than 5 percent in the last quarter of 2021," Moody's said in its report. "However, high oil prices and supply distortions remain a drag on growth," Moody's added.
Brent crude oil prices surged to their highest since 2014 to cross $105 a barrel last week in response to the Russia-Ukraine conflict. India imports nearly 80 percent of its oil requirements and saw its trade deficit balloon to $160 billion in the April-January period, compared to $76 billion in the same period a year earlier. India's benchmark Sensex index closed 0.70 percent higher in Mumbai ahead of the economic data released yesterday. — AFP
