Economy to start growing next yr: Study

Morgan Stanley’s report, titled Insight: 2021 Global Macro Outlook, stated that as first signs of recovery started emerging in October, the economy is likely to continue this momentum of recovery. It added that the Indian economy would see strong growth only by April next year. It noted that for a few domestic demand-oriented economies like India and Brazil, a number of indicators have recently exceeded pre-COVID-19 levels and are registering positive year-on-year growth.

The study notes that emerging market growth will rise to 7.4%, higher than the consensus expectation of 6.3%. “Driving this synchronous recovery will be a more expansive reopening of economies worldwide and the extraordinary monetary and fiscal support now in place. Global GDP, already at pre-COVID-19 levels (based on seasonally adjusted GDP levels), continues to accelerate and is on track to resume its pre-COVID-19 trajectory by 2Q21 (April),” it stated.

The report also took into account some of the risks along the path to recovery – a sharper rise in hospitalisations leading to the imposition of more lockdowns, a delay in the approval of vaccines for emergency use and upside inflation risks from 2H21, which could create a disruptive shift in expectations on Fed policy.