“We expect consumption to be a major contributor to growth in 2022, as the economy fully reopens thanks to a noticeable improvement in the viral situation and adequate progress on vaccination,” Goldman Sachs said. in a report.
He expects government investment spending to continue, emerging signs of a pickup in private business capital spending (capex) and a pickup in housing investment.
The U.S. brokerage estimated the fiscal year 23 growth figure to be higher, making its analysts one of the few to expect growth to accelerate even after the market has run out. base effect.
Earlier today, analysts at UK brokerage firm Barclays said fiscal 22 growth would be 10% and slow to 7.8% in fiscal 23.
Goldman Sachs said that as growth catches up, the RBI will begin to normalize its policy and expects cumulative rate hikes of 0.75% in 2022. The central bank is currently in stage two. of the four-step policy normalization process, which began with “less accommodating” comments from the rate-setting panel and will end with repo rate hikes, he added.
Agreeing with the same view, Barclays also said that the policy was already becoming less accommodating and that there would be a hike in the repo rate during the next policy review in December, which will be followed. rate hikes next year.
Barclays said Indian policymakers have focused on managing growth risks for the past three years, noting that the slowdown started before the start of the pandemic itself, and added that the focus will now be on on managing financial stability issues.
Inflation will subside in the second half of next year after being high and may prompt appropriate RBI action, he said.
Goldman Sachs analysts expect headline consumer price inflation to hit 5.8% in 2022, up from 5.2% in 2021.