COVID causes Credit Suisse to reduce nominal growth in India to 13-14%

By Aditya Raghunath – Brokerage Company Swiss credit (SIX 🙂 lowered its nominal GDP growth forecast for India by 50-300 basis points to 13-14%. The company expects a strong rebound in the second half of FY22 as the impact on tax collections will be limited, it said.

“Our macro strategy team expects the overall impact of the pandemic restrictions on GDP in the baseline to be around 150 basis points. Even if we assume an impact of 300 basis points if the nationwide restrictions are extended, nominal FY22 GDP growth can still be 13-14%, ”said Premal Kamdar and Jitendra Gohil, equity analysts at Credit Suisse Wealth Management India.

While India has faced a serious challenge in dealing with the second wave of the pandemic, Credit Suisse believes India is better positioned this time around to tackle the pandemic.

The pent-up demand will boost India’s recovery, albeit more slowly than expected. However, the recovery will also be slower than after the first wave. As India’s vaccination campaign gains traction, it will also help the economy recover.

Credit Suisse has been positive about India’s recovery since April. A note was issued last month stating, “Even assuming a 100-150 basis point cut in India’s GDP, India can still achieve low double-digit real GDP growth in FY2022, the fastest growth of the world.”

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