Economic recovery on sold path in India amid COVID: UN

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The United Nation report has found that in India, the economic recovery is on a solid path, amid rapid vaccination progress, less stringent social restrictions, and still supportive fiscal and monetary stances.

The UN has stated that GDP is projected to expand by 6.7 per cent in 2022, after an expansion of 9.0 per cent in 2021.

The report pointed out that East and South Asian economies are also vulnerable to the uncertainties and risks imposed by the pandemic, especially those countries with low vaccination rates.

In addition, accelerated global monetary tightening could increase volatility, trigger capital outflows and disrupt credit growth, especially in countries with elevated debt and large financing needs.

The report notes that the global economic recovery is facing significant headwinds amid new waves of COVID-19 infections, persistent labour market challenges, lingering supply chain challenges and rising inflationary pressures.

“After expanding by 5.5 per cent in 2021, the global output is projected to grow by only 4.0 per cent in 2022 and 3.5 per cent in 2023,” the report finds.

“Without a coordinated and sustained global approach to contain COVID19 that includes universal access to vaccines, the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy,” noted Liu Zhenmin, Under-Secretary-General of the United Nations Department of Economic and Social Affairs.

According to the report, the headline GDP growth in East Asia is estimated at 6.7 per cent in 2021 and projected at 4.9 per cent in 2022. East Asian economies have rebounded from the worst of the pandemic, supported by strong policy stimulus and external demand.

However, the growth is projected to moderate, as a slow recovery of labor markets weigh on consumption and exports growth slows down. Subdued inflation and still low public debt levels offer room for policymakers to continue accommodative monetary and fiscal policies.

The recovery sustains its momentum in South Asia, amid contained COVID-19 infections, robust remittance inflows, and broadly supportive policy stances. After an estimated expansion of 7.4 per cent in 2021, regional GDP is projected to expand at a more moderate pace of 5.9 per cent in 2022.

The recovery, however, is still fragile and uneven. A sustained recovery in economic activity and employment moving forward may prove challenging, as monetary and fiscal policy space become more constrained.

The report further finds that global growth prospects face major risks. New waves of infections and the emergence of new variants of the COVID-19 virus threaten the recovery.

“The lingering pandemic entails other risks including prolonged supply-chain disruptions and rising inflation. A faster-than-anticipated tightening of global financial conditions could also raise concerns on financial stability, including risk of debt distress,” the report reveals.


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