Activity holds up as Omicron peaks

The rapid spread of the Omicron variant in India has caused economic activity to weaken so far in 2022. But the damage has been much less severe than during the previous two outbreaks. Perhaps unsurprisingly, airport traffic has been one of the bigger casualties, but broad activity indicators such as railway freight volumes and electricity supply have held up well. This is a reflection of that fact that restrictions have been more targeted, and also that firms and households have adapted better to the containment measures that have been implemented. With the Omicron outbreak now subsiding in several states, we are increasingly confident that it will prove only a minor setback for the recovery.