How much scarring will the pandemic leave?

How much scarring will the pandemic leave?

The pandemic’s most significant economic legacy in India will be a heavily-damaged banking sector that is likely to constrain investment over the years ahead. This underpins our view that the economy could be 5% smaller over the long run than it would have been had the pandemic not happened. In view of the wider interest, we have also made this publication available to clients of our Long Run service.
Shilan Shah Senior India Economist
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India Economics Weekly

Encouraging signs in state-level virus data

COVID infections have been falling in parts of India over the past week, particularly in those areas that were first to report Omicron waves. We’re hopeful that this is a sign of things to come, and wouldn’t be surprised if India’s third wave had largely subsided by the time the RBI next meets in early February.

21 January 2022

India Economic Outlook

On the cusp of policy tightening

India’s Omicron wave should only be a temporary setback to the economic recovery. As long as recurrent large waves of COVID are avoided, we think that economic growth will be faster this year than last. We also think that inflation will soon start to worry the RBI. Consequently, policy rates will be hiked by more than most anticipate.

19 January 2022

India Economics Weekly

Omicron surging, asset sales progressing

COVID-19 cases in India are still surging. But the early indications are that healthcare systems are not under significant pressure, and we’re hopeful that India’s third wave will peak before long. Even if it doesn’t, the better-than-expected fiscal performance over recent months means that there is policy space for the government to intervene.  

14 January 2022

More from Shilan Shah

Emerging Markets Economics Update

Emerging Markets Capital Flows Monitor

Net capital outflows from EMs have persisted in recent weeks and, looking ahead, a further rise in US Treasury yields could lead to larger outflows over the coming months. The good news is that – Turkey aside – vulnerabilities to outflows in most major EMs appear limited.

16 November 2021

India Economics Update

MPC fault lines emerge, but doves still in control

The minutes of the Reserve Bank’s October policy meeting suggest greater divergence of opinion within the MPC, with two members calling for more definitive steps towards policy normalisation. But most members – including Governor Shaktikanta Das – are more concerned about downside risks to the economic recovery. That supports our view that policy will remain loose for several more months yet.

25 October 2021

India Economics Update

Burgeoning trade deficit is not a major concern

The sharp widening in India’s goods trade deficit in September was driven in part by an unusually large jump in oil imports that we think will prove a one-off. And with the economic recovery entering a slower phase, imports more generally are unlikely to rise much further from here. The big picture is that external risks still look limited.

15 October 2021
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