HSBC upgrades FY22 growth forecast to 11.2 per cent

NEW DELHI: HSBC Bank, in its latest report, has upgraded India’s GDP growth forecast for financial year 2021-22 to 11.2 per cent, expecting the economy to completely rebound to levels seen in the pre-Covid period.

“By some measures, industrial activity is only a few percentage points below its pre-pandemic peak. Mobility, too, has largely recovered, which should help spur services demand, which is still 25 per cent below pre-pandemic level, in the coming months,” the HSBC report said.

The report adds that the pick up in business activity coupled with a steady fall in Covid cases should aid a faster economic recovery across Asia, and expects almost all economies in  the region to reach their pre-pandemic level by the end of 2021, with the exception of Japan and Thailand.

“The only exceptions are Japan and Thailand (next year), and the Philippines (beyond 2022). Encouragingly, we expect the rebound to have legs: growth in 2022 is likely to remain robust, still exceeding its pace in 2019, in all Asian markets, except for mainland China, Taiwan, and Vietnam,” wrote Frederic Neumann, co-head of Asian economics research at HSBC.

The report has also lowered the inflation target for India, despite rising crude oil and auto fuel prices. The report lowered the consumer price inflation (CPI) forecast for 2021 to 4.9 per cent and to 4.7 per cent for 2022. 

Retail inflation based on the Consumer Price Index eased to 4.06 per cent in January—a 16-month low. Inflation had peaked to an over six-year high of 7.61 per cent in October. Inflation has fallen mainly on account of food inflation, which almost halved to 1.89 per cent in January compared to 3.41 per cent recorded during the previous month.