The Indian economy is expected to grow 7.2 per cent in 2021 with its recovery constrained by the ongoing human and economic cost of Covid-19, and the negative impact of food price inflation on private consumption, the UNCTAD said in its Trade & Development Report 2021.
Painting a dim picture for next year, the report, released on Wednesday, points out that a slow recovery of jobs, matched with a more adverse policy environment, and continuing pressure on trade balance, the economy is expected to decelerate to 6.7 per cent growth in 2022.
“Given the inherent fragilities in coping with the pandemic and restoring employment and incomes, growth in 2021 as a whole is estimated at 7.2 per cent, insufficient to regain the pre-Covid-19 income level,” the report launched on Wednesday observed.
In India, consumer inflation was already at 6 per cent before the pandemic. The Covid-19 shock caused a temporary dip in prices, but as the economy recovered and food prices accelerated, the country returned to a 6 per cent inflation rate in mid-2021, it stated.
UNCTAD expects the global economy to bounce back in 2021 with growth of 5.3 per cent, the fastest in nearly 50 years. The rebound is, however, highly uneven along regional, sectoral and income lines.
“Growth deceleration next year could prove sharper than expected if policymakers lose their nerve or heed misguided calls for deregulation and austerity,” the report pointed out.