India: Growth returns, but challenges remain
- The Indian economy has been severely impacted by the pandemic. But recent counts of daily increases suggest India has passed its first peak of COVID-19 cases
- Real GDP growth has improved sharply from -24% year-on-year in the June-quarter to -7.5% in the September-quarter, but near-term challenges remain
- Sluggish domestic and external environments will likely serve as key drags on Indian growth. We expect growth to contract by 9% in FY21 before rebounding to 8% in FY22
- Near-term risk surrounds the ongoing containment of the pandemic, which could weigh on domestic demand on the back of virus fears and income uncertainty
- Geopolitical conflict remains tense, with India imposing economic sanctions against China. Under the current situation, these could exacerbate domestic condition
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