India’s economic recovery may weaken by 2nd COVID-19 wave: Moody’s

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Moody’s Investors Services on Tuesday said the escalating second wave of COVID-19 infections in India present a risk to its growth forecast of 13.7% for FY22, reported the Live Mint.

The Moody’s have made the remarks saying because the re-imposition of virus management measures will curb economic activity and could dampen market and consumer sentiment.

A total of 1,61,736 new Covid-19 cases have been reported on Tuesday, pushing India’s tally of cases to 1,36,89,453, according to data updated by the Health Ministry.

“The announced countermeasures to combat the second wave – some of which are due to remain in place at least until the end of April – risk weakening the economic recovery,” it said.

However, the Moody’s further added, targeted nature of containment measures and rapid progress on vaccinating the population will mitigate the credit-negative impact.

Moody’s said given the focus on “micro-containment zones” to deal with the current wave of infections, as opposed to a nationwide lockdown, it expects that the impact on economic activity will be less severe than that seen in 2020.

“India’s very low coronavirus death count (only about 170,179 deaths have been recorded as of 12 April) and relatively very young population also help mitigate risks. GDP is still likely to grow in the double digits in 2021 given the low level of activity in 2020,” it added.

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