India’s economy is forecast to grow 7.2% this year, yet growth could experience a slowdown in 2022, according to a United Nations report.
 
The UNCTAD Trade and Development Report 2021 states a strong recovery is predicted for the global economy this year, despite the high degree of uncertainty on regional and country levels during the second half of the year.
 
The findings show India suffered a 7% contraction last year, and is forecast to grow 7.2% in 2021.
 
India’s recovery is being hampered by the ongoing human and economic cost of the pandemic, as well as the impact of food price inflation on private consumption, according to the UNCTAD report.

As such, India will record economic growth of 6.7% in 2022, the findings show, slower than the country’s forecast growth rate this year.

That said, despite this slower growth rate, India will remain the fastest-growing major economy in the world next year.

Following a 7.0% contraction in 2020, India revealed robust quarterly growth of 1.9% in Q1 this year, following strong momentum in H2 last year and government spending in goods and services.

"Meanwhile, a severe and broadly unanticipated second wave of the pandemic, compounded by bottlenecks in the vaccine roll out, hit the country in the second quarter, on top of rising food and general price inflation, forcing widespread lockdowns and drastic consumption and investment adjustments,” the report added.

India’s central bank forecasts another steep contraction (quarter-on-quarter) in Q2, followed by a subsequent rebound.

"Going forward, assuming away a resurgence of the pandemic to the degree experienced in the second wave, a revitalisation of private sector activity, subject still to a slow recovery of jobs, is likely to be matched with a more adverse policy environment, especially on the fiscal front, and with continuing pressures on the trade balance. On these conditions, the economy is expected to decelerate to 6.7% growth in 2022,” the report said.