Former Reserve Bank of India (RBI) governor Raghuram Rajan has cautioned against expecting a strong economic recovery in 2022. With the Union Budget ready to be unveiled in just a few weeks, Rajan said the global economy may not perform as well as in the previous year as recovery begins to flatten out.
“Notwithstanding the Omicron variant and the devastation it is already causing, I think there will be a slowdown in this quarter’s activity. But it will get pushed a little further. That said, I would resist the temptation to say we have seen the worst and that the virus is behind us,” he said in an interview with The Economic Times.
He added that it is not possible to predict with complete surety what the COVID-19 pandemic might bring next, and thus to temper expectations reasonably.
“This virus is ever morphing. Early last year, we did not imagine the extent to which Delta would be vicious and of course Omicron -- there could be variants which are far more deadly than this one. So I think we should have cautious optimism that there are, globally, sufficient pent up demand reservoirs of stimulus that the economy will still grow quite substantially,” he added.
Rajan’s predictions are mostly in line with estimates from other organisations that have stated that both the global and the Indian economy are going to witness a slowdown in economic activity. The slowdown can mostly be attributed to the fact that recovery in many sectors and groups has still not been reached pre-pandemic levels.
The World Bank recently pegged India’s growth estimates at 8.3 percent for the current fiscal while estimating global growth at 5.5 percent. But the international body also reported that as pent-up demand extinguished itself, global economic growth will continue to decelerate. The body lowered its forecast for the year, stating that the global economy will grow by 4.1 percent in 2022.
The United Nations has also made adjustments over concerns of new waves of the pandemic, continuing labour shortages, supply chain issues and inflationary pressures.
(Edited by : Shoma Bhattacharjee)
