V-shaped economic recovery of 2020 won’t be repeated after this year’s Covid-19 carnage
Published On: Tuesday, June 1, 2021 | By: Team KnowMyStock
The V-shaped economic recovery in 2020 won’t be repeated after this year’s Covid-19 carnage according to some analysts. Government statistics released 0n 31st May showed 1.6% growth in GDP from a year earlier in the March quarter, before a deadly second wave of infections. But this expansion, an improvement over the 0.5% rate in the previous three months, is a statistical artifact. A better metric is seasonally adjusted quarter-on-quarter growth, which Capital Economics calculates at 0.7%, a sharp slowdown from 9.5% in the December quarter. During the current surge in cases, there have been only local restrictions on physical activity. That’s making some analysts optimistic about the resumption of growth that will inevitably occur when the coronavirus fully recedes. Yet there are several crucial differences from last year that could make it harder for India to bounce back.
India is witnessing a huge shift in resources away from the ultimate providers of labor and capital, and toward borrowers: companies and the government.
Retail investors piling into equities even when the real economy struggles is not prosperity, but an optical illusion.
With growth firming up in the rest of Asia, several countries will slowly start raising interest rates before the Federal Reserve. To preserve financial stability, India needs to think about joining them. Not chase dreams of yet another V-shaped recovery, according to expert economists.
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