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Second Covid-19 wave in India to impact GDP growth – leading macroeconomic influencers

28 Apr 2021 (Last Updated April 28th, 2021 08:02)

Economists believe that the rapid spread of coronavirus infection amid the second wave in India will lead to contraction of GDP growth rate in 2021.

Second Covid-19 wave in India to impact GDP growth – leading macroeconomic influencers
Credit: pixxelstudio91/Shutterstock.com.

Economists believe that the collapse of the Indian healthcare system amid the rapid spread of a second wave in coronavirus infection, will lead to contraction of India’s GDP growth rate in 2021.

Christophe Barraud

Christophe Barraud, an economist, shared an article on downgrading of India’s GDP growth rate for 2021 from 11.8% to 10.2% by global forecasting firm Oxford Economics. The collapse of the healthcare system amid rising number of Covid-19 cases in the country, poor vaccination rate and lack of efficient government strategy to tackle the pandemic were attributed to be the primary reasons to downgrade the GDP growth rate.

The Indian government’s targeted lockdown approach and strong consumer behaviour may ease the economic impact of the second wave. However, if healthcare systems continue to be burdened with cases and states are forced to impose stringent restrictions, the GDP growth rate may be downgraded further.

Amanda Glassman

Amanda Glassman, executive vice president and senior fellow at the Center for Global Development, shared an article on the economic case for global vaccinations. The global economy may lose up to $9.2tn if developing economies are not provided access to Covid-19 vaccines, according to a study conducted by the International Chamber of Commerce (ICC) Research Foundation.

Covid-19 vaccines have proven to be effective in mitigating the economic and health consequences of the pandemic although access to these vaccines have been uneven across the world. Developed economies have managed to secure supply of the most effective Covid-19 vaccines thereby severely impacting their access to emerging economies. Further, the COVID-19 Tools (ACT) Accelerator, which provides equitable access to coronavirus tests and treatments is underfunded effecting its ability to procure vaccines for developing countries.

The losses caused by uneven distribution and access of vaccines is much lower than the finance needed to provide equitable access to all economies. Financing the ACT Accelerator and coordinated approach to distribution of vaccines is essential for recovery of the global economy from the pandemic.

John Ashcroft

John Ashcroft, an economist, shared an article on Goldman Sachs’ prediction that the UK economy is projected to grow faster than the US economy in 2021. The UK GDP is expected to grow at 7.8% in 2021 compared to 5.5% for the US. The investment bank noted that the UK economy is emerging from the Covid-19 crisis faster than previously projected with April flash Purchasing Managers Index (PMI) and service PMI expanding strongly.

The UK economy shrank by 9.8% in 2020, the worst among the G7 advanced economies. However, the economy contracted less than expected in the first quarter of the year despite lockdowns. Further, households are expected to spend more than 5% of the £150bn ($208.4bn) is savings made during the pandemic thereby boosting GDP growth.

Constantin Gurdgiev

Constantin Gurdgiev, an economist, shared an article on Greece submitting an economic recovery plan to the European Union (EU) to boost economic growth by seven percentage points in the next six years. Greece was supposed to receive €18.2bn ($21.96bn) in grants and €13bn ($15.7bn) in cheap loans, as part of a coronavirus recovery package approved by leaders of the EU last year.

The package is equivalent to 16% of the country’s GDP and is expected to help the country recover from the economic crisis created by the pandemic. It also includes 170 proposed projects focused mostly on green energy apart from digital upgrades and development of transportation infrastructure.