Indian economy recovering quickly as pandemic ebbs: Report

The Indian economy appears to be recovering quickly with faster-than-expected relaxations as the Covid-19 contagion ebbs, according to the Credit Suisse Investment Outlook 2022 report.

“Conducive monetary policy has accelerated the economic and earnings recovery. However, following a 31 per cent rally year-to-date, India is the most expensive market in the region, which suggests a large part of the recovery is already priced in. As such, we expect Indian equities to perform in line with Asian equities in 2022,” the report said.

According to the Credit Suisse Investment Outlook 2022, the global economy is expected to grow by 4.3 per cent. Although several central banks have started to withdraw pandemic stimulus, interest rates are set to remain at or near zero in the major developed economies. Against this backdrop, equity returns should remain attractive, though they are likely to be more moderate than last year.

“The global economy looks to remain on a solid path in 2022, driven by robust demand, a supportive fiscal and monetary policy, and the continued relaxation of Covid-19 related restrictions. Against this backdrop, we expect equities to deliver attractive single digit returns, supported by earnings. Beyond the shift to a post-pandemic normal, we believe 2022 will see the start of a great transition to a world in which sustainability plays an ever-increasing role for consumers, businesses, governments, and regulators. In this context, we expect environmental, social and governance trends to remain focal and investors to continue including sustainability considerations when allocating capital,” it added.

John Woods, Chief Investment Officer Asia Pacific at Credit Suisse, said: “In 2022, domestic demand in developed markets will likely pivot more towards services. This will potentially slow export growth for all countries in Asia, but for two offsets: a gradual recovery in tourism, and the improvement in supply chains in the second half of 2022. China’s growth outlook is something we are watching closely. We anticipate China’s Gross Domestic Product (GDP) growth to decelerate gently into 2022 to 6.1 per cent from 8.1 per cent this year. China has a lot on its plate right now – deleveraging the property market with minimal spillover, a swathe of power outages, and re-engineering its longer-term economic priorities toward common prosperity. The last of which is causing disruptions in a range of sectors, while the resetting of China’s geopolitical relations with the West presents risks to its external trade.”

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