Geneva:The Indian economy is expected to grow at 7.2 per cent in 2021 but growth could slow down next year, according to the UNCTAD Trade and Development Report 2021. It said the recovery is constrained by the ongoing human and economic cost of the Covid-19 pandemic and the negative impact of food price inflation on private consumption.
The report said India, which experienced a contraction of 7 per cent in 2020, showed strong quarterly growth of 1.9 per cent growth in the first quarter of 2021 on the back of the momentum of the second half of 2020 and supported by government spending on goods and services.
Meanwhile, a severe and broadly unanticipated second wave of the pandemic, compounded by bottlenecks in the vaccine rollout, hit the country in the second quarter on top of rising food and general price inflation, forcing widespread lockdowns and drastic consumption and investment adjustments. "Income and wealth inequalities have widened, and social unrest has increased...On these conditions, the economy is expected to decelerate to 6.7 per cent growth in 2022."
Meanwhile, South Asia suffered a sharp contraction of 5.6 per cent in 2020, with the region's economic activity brought to a halt thanks to widespread restrictions. Deficient public healthcare systems and high levels of informality magnified the impact of the pandemic in terms of both health and economic outcomes, which was reflected in a stark rise in poverty rates.
UNCTAD expects the region to expand by 5.8 per cent in 2021, with the more vigorous recovery signalled at the beginning of the year muted by a rapid surge in infections during the second quarter of 2021.