The Organization Of Petroleum Exporting Countries (OPEC) stated in a monthly update yesterday that the current reading signalling a further expansion in the services sector in India, which makes up more than 50% of India's gross domestic product, further increases the positive prospects for the economy. As is the case with other economies around the globe, there is cautious optimism due to the high dependence of the economic recovery on improvement of vaccination rates, which would translate into a reduction in social distancing restrictions.
So far India has been highly proactive in securing vaccines yet the vaccinated population rate needs to increase considerably to meet the government goal of reaching 300 million Indians by the end of 1H21. Uncertainty remains and the downside risk is related to the stressed financial market, the waning fiscal impulse as well as concerns about another COVID-19 wave on both global and local levels. OPEC noted that considering the signs of broader recovery in 4Q20 and the first two months of 2021, India's 2021 GDP growth forecast is revised up to 9.0% from 7.5% last month.
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