India’s GDP expected to grow at 7.2% in 2021, to be fastest growing major economy in 2022: UNCTAD Report

The UNCTAD report has noted that India’s GDP growth rate is expected to grow at 7.2% in 2021. In 2022, even with a slower growth rate of 6.7%, the country will still be the fastest-growing major economy. 

India's GDP growth rate
India's GDP growth rate

United Nations in a report has said that India is expected to grow at 7.2% in 2021, however, the country’s economic growth can decelerate in 2022.

The United Nations Conference on Trade and Development (UNCTAD) Report 2021 released on September 15, 2021, also stated that recovery in India is constrained by the ongoing human and the economic cost of the Coronavirus pandemic as well as the negative impact of food inflation on private consumption.

However, the report sounded cautiously optimistic by saying that the global economy is set for a strong recovery in 2021. After a 3.5% fall in 2020, the UNCTAD report expects the world output to grow 5.3% in 2021, partially recovering the ground lost in 2020.

India’s economy to grow at 7.2% in 2021, fastest-growing economy

The UNCTAD report while noting India’s GDP growth rate has said that India’s economy is expected to grow at 7.2% in 2021. The country had suffered a contraction of 7% in 2020.

The latest report has projected that India will clock an economic growth of 6.7% in 2022 which will be slower than the expected growth rate of the country in 2021.

However, on a positive note, even with a slower growth rate of 6.7%, India will still be the fastest-growing major economy in the world in 2022.

The report said that the country has shown strong quarterly growth of 1.9% in the first quarter of 2021, on the back of the momentum of the second half of 2020 and through the government’s spending on goods and services.

Unanticipated second wave in India

The report highlights that a severe and broadly unanticipated second wave of COVID-19 pandemic had hit the country in the second quarter leading to the rise in the price of food as well as general price inflation.

Due to the worsening situation, India is seeing widened inequalities in income and wealth as well as a rise in social unrest.

The report further states that given the inherent fragilities in coping with the COVID-19 pandemic and restoring employment and incomes, growth in 2021 in India is expected to be at 7.2%, which is still insufficient to regain the pre-COVID-19 income level.

India’s GDP to decelerate to 6.7% in 2022

The UNCTAD report further states that assuming a resurgence of the pandemic to the degree that was experienced in second wave in the country, a revitalization of the private sector activity, subject to a slow recovery of jobs, is most likely to be matched with a more adverse policy environment, particularly on fiscal front and with continuing pressure on trade balance.

India’s economy, on these conditions, is expected to get decelerated to 6.7% growth in 2022.

Global growth to soar at 5.3% in 2021

The United Nations Report, while highlighting the growth rate of the global economy mentioned that the global growth rate is expected to soar at 5.3% in the year 2021.

It will be the fastest in almost half a century, with some of the nations around the world restoring-or even surpassing- their output level of 2019 by the end of 2021.

The report further added that, however, the global picture beyond 2021 remains shrouded in uncertainty.

Economic activity affected in South Asia

The report has stated that South Asia has suffered a sharp contraction of 5.6% in 2020, with its economic activity brought to a halt because of the COVID-19 pandemic and widespread restrictions.

The high levels of informality and deficient public health care systems further magnified the impact of the COVID pandemic in terms of both economic and health outcomes.

In 2021, UNCTAD expects South Asia to expand by 5.8%. Moreover, the very limited progress made in vaccine rollout has continued to leave the South Asian nations more susceptible to future outbreaks.  The UN, for 2022, expects the region’s growth rate to moderate to 5.7%.

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