Does The Second Wave of Covid-19 Pose Threat To Economic Growth?

Although there has been a noticeable slow down in the new COVID-19 cases reported daily, it cannot be seen as a sign of early relief, experts say. The threat of the second wave of the global pandemic continues and the upcoming few weeks are critical. However, it may not affect the recovery of the Indian economy.

On Wednesday, there were around 28000 new cases of the Covid-positive that were reported, the greatest single-day record in more than a quarter of a year. The demand of the scenario, Maharashtra kept on to lead the surge with certain parts of the area to enable lockdowns for preventing further spread. Kerala, Chhattisgarh, Gujarat, Punjab, Tamil Nadu, and Karnataka excessively reported an increase in the active cases, as per the data from the ministry of health and family welfare.

Since the rise in the new Covid-19 cases being reported in the states outside Maharashtra, India takes it as an increased risk for the second wave of the pandemic, explained in a research note by Nomura dated March 17, 2021. While the increase in these cases represents a near-term risk, medium-term suggestions were limited, as per Nomura research note.

Sonal Varma and Aurodeep Nandi, India Economists, Nomura said, “We accept that the rise in Covid cases can affect near-term development approaches and postpone market assumptions on the circumstance of policy normalization. However, we assume only marginal negative development effects, as the legal limitations are less strict, the merchandise sector keeps on moving gradually along and households and organizations have changed according to the existing situations. ”

Nomura further added that over the medium term, the development of vaccinations, powerful worldwide growth, and decreased effects of easier economic conditions are expected to influence development. However, last year in June 2020, to tackle the COVID-19 global disruption, the International Chamber of Commerce issued guidelines to trade finance markets.

However, if the new cases of Covid-19 keep rising in the upcoming weeks, the legal authorities may be bound to announce a stronger and more limited lockdown, said Kaushik Das, the chief economist at Deutsche Bank. This is likely to have a big impact during the April-June 2021 quarter.

Predicting such a possible increase in Covid-19 cases, Das estimates the growth in the GDP as well could likely be decreased at 25.5% for the quarter, in comparison to 26.2% estimated by the RBI.

Read more: https://www.emeriobanque.com/blogs/does-the-second-wave-of-covid-19-pose-threat-to-economic-growth

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