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India’s Economy Exits Deep Recession as Fledgling Recovery Strengthens

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Economic output grew 0.4 percent in the third quarter, but the recovery is uneven, with small businesses facing the brunt of the downturn.
After plunging into one of the worst recessions of any major economy, India is showing signs of a modest comeback. But that recovery is uneven, and the country is still struggling to find ways to sustain growth. Its service sector is vulnerable, and the vast informal economy — which employs farm hands, day laborers, rickshaw drivers and many millions of others — remains weak as well. India’s economic output grew 0.4 percent in the third quarter, which ended in December, compared to the same period a year earlier, according to economic data released by the Indian government on Friday. The figures show that India has emerged from a recession, which is generally defined as two consecutive quarters of economic shrinkage. The economic turnaround is good news for the government of Narendra Modi, the prime minister, and for Indian households that have struggled with the impact of the pandemic on the country and on the global economy. But that rate is still slow compared to previous years, when the economy has grown at a pace of 6 percent a year or higher. Growth had already been stumbling for the two years before the pandemic hit. The challenge for the government will be to find opportunities for a relatively young and aspirational population. Economists said that the fledgling recovery was driven by services, agriculture, construction and some sectors of manufacturing. The service sector — especially financial and professional services — has done much better than expected, said Priyanka Kishore, head of South Asia at Oxford Economics. “The broadening of the recovery, alongside the solid growth momentum, creates upside risks to the 2021 growth outlook,” she said.

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