NEW DELHI: The economic recovery that is under way is likely to get a boost in the New Year but global headwinds and the uncertainty created by the Covid surge in China will emerge as major roadblocks.
Amid the sharp slowdown in global growth, India has emerged as a standout nation and estimates show that growth is likely to be around 7% for 2022-23 riding on the momentum of robust domestic demand.
The economy has so far staged a smart recovery after the bruising impact of Covid waves. Several indicators have pointed to growth getting back on track. While the Reserve Bank of India (RBI) in its latest monetary policy review has cut its GDP growth forecast to 6. 8% for 2022-23, economists reckon that expansion will be around 7% — not a bad number amid the likely recession in many countries.
There are several challenges that may confront policymakers in the New Year. The first is the sudden development on the Covid front. The government has moved swiftly to take precautionary measures against the backdrop of the surge in China and some other countries. The solid track record on vaccination is expected to hold India in good stead but the situation in China will likely remain an uncertainty calling for strong vigil and deft navigation of the economy.
The prospects of recession in several countries will also be a major challenge for the country’s exports, which have already started losing momentum. But there are several positives that are likely to hold on their own. Domestic demand remains robust, the farm sector has remained resilient and consumption has shown signs of a revival after the reopening of contact-intensive sectors.
“India’s economy is relatively more insulated from global spillovers than other emerging markets. India is less exposed to international trade flows and relies on its large domestic market. India’s external position has also improved considerably over the last decade,” says a recent World Bank report.
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