The second COVID-19 wave may have a more lasting damage on the Indian economy, said Moody’s Analytics on Monday. In a report titled 'APAC Economic Outlook: The Delta Roadblock', Moody’s predicted that exports will once again be the foundation for recovery. It estimated economic recovery to resume by year-end.
"While its second wave, which is now coming to an end, may have more lasting damage to the economy as the pandemic's one-two punch hit small enterprises very hard, exports will once again be the foundation for recovery," it said.
The Delta variant is adversely impacting Asia-Pacific (APAC) economies but the current hit will not be as severe as the recession in the second quarter of last year, it stated.
Even though exports make up relatively small shares of the economy, high commodity prices have boosted the value of exports, stated Moody’s. This helped in the economic recovery after the first wave of COVID-19 too.
While global economic recovery is at a solid pace, parts of Asia will only reflect this in the near term due to social distancing restrictions in place, especially in Southeast Asia as Delta variant continues to spread in the region, it said. Moody’s added that India is struggling to accelerate the pace of vaccination.
Moody's Analytics said global GDP this year will be in the range of 5-5.5 per cent, well above its 3 per cent potential growth rate as recovery continues from last year's pandemic recession.
"Global trade continued its rapid recovery well into this year's second quarter. Global industrial production also is still rising, although now at a slower pace than merchandise trade as tie-ups in global supply chains slow many manufacturing processes," it added.
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