Global investment bank Nomura has projected India to be the fastest growing Asian economy in 2021, with an estimate of 9.9% GDP growth in the coming calendar year.
The brokerage turned positive on India’s cyclical outlook saying near-term risks of a resurgent pandemic unlikely to derail growth, Nomura’s chief India economist, Sonal Varma, said.
“We have a positive view on India's cyclical outlook, we are pencilling in a GDP growth rebound to 9.9% (in 2021) versus -7.1% in 2020. Near term, virus resurgence is a risk but we don't think this would derail the cycle, which we believe is set to accelerate further,” Varma said during a conference call on Wednesday.
Nomura believes India is on the cusp of a cyclical recovery as it projected GDP growth at 32.4% in the first quarter of the coming fiscal on the back of a low base that will ease to 10.2% in the next quarter, its Asia 2021 Outlook report released on Tuesday said.
Three factors supported the positive outlook that was last changed to negative at the end of 2018, according to Varma. “One, the lag effects of easy financial conditions. Second, the synchronised global recovery and third, the vaccine pivot point, which for India, we think, will come in the third quarter (July-September) of next year.”
“These factors in our view should lead to pent-up activity and catch-up in some of the lagging sectors like consumption and services as the year progresses,” Varma added.
Nomura defined the vaccine pivot point as the point at which vaccines start to become more widely available and show demonstrative success.