A new report by UBS Global Research has projected India’s economic growth as reaching a multi-decade high in 2022. Its economy is expected to clock the fastest growth of all Asian nations, it said.

“The Covid situation in India has stabilized for now. We expect India’s real GDP growth to rebound to +11.5 percent year-on-year in FY22 (consensus +9.2 percent year-on-year),” reported Tanvee Gupta Jain, economist at UBS Securities India.

 “While economic growth in FY22 could be at a multi-decade high, this largely reflects the rebound from deeper contraction in FY21 GDP (-7.5 percent year-on-year),” Jain said.

Growth will moderate to six percent year-on-year in FY23 as domestic and global financial conditions begin to normalize. 

UBS had earlier estimated that the Indian economy would lose 10.6 percent of its GDP due to pandemic-related restrictions. However, the country’s economic activity recovered more than expected in the third and fourth quarters of 2020.

According to the report, financial conditions have now eased to levels better than those registered during the pre-Covid period (January/February 2020), which is also helping support economic recovery. 

The bounce-back in India’s economic growth will be largely led by continued improvement in consumption, stronger global growth, success in rolling out a Covid-19 vaccine, and the focus on growth supportive reforms, said UBS.

“Of these, the corporate tax rate cut, incentives for manufacturing, easier labor laws, and encouraging FDI [foreign direct investment] inflows bode well for India’s medium-term growth, in our view,” Gupta said.

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