At 9.9% Nomura Says Indian Economy Will Grow Fastest in Asia in 2021

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At 9.9% Nomura Says Indian Economy Will Grow Fastest in Asia in 2021
Credit: © Reuters.

By Aditya Raghunath -- Japanese financial giant Nomura's (NYSE: NMR ) latest report says that India could be the fastest-growing economy in Asia in the calendar year 2021. Nomura forecasts India’s GDP to grow at 9.9% in 2021, beating China which is forecasted at 9%, and Singapore at 7.5%. Nomura made this prediction in its Asia 2021 Outlook report, authored by Nomura Chief India Economist and Managing Director Sonal Varma and Aurodeep Nandi.

Varma said, “We project GDP growth to remain in negative territory in Q1-2021 (- 1.2%), pick up to 32.4% in Q2 on base effects, before easing to 10.2% in Q3 and 4.6% in Q4. Overall, we expect GDP growth to average 9.9% in 2021 versus -7.1% in 2020 and 11.9% in FY22 (year ending March 2022) versus -8.2% in FY21.”

However, this forecast comes with its share of risks. The recovery in a K-shaped format means some sectors will continue to struggle. The informal sector has lost a lot of jobs and recovery in this space will be slow. The cyclical recovery might be job-less which will result in a lower per capita income and higher income inequality.

Corporates may be focused more on reducing debt rather than invest in growth and increase capital expenditure. The financial space will also see more stress because of NPAs (non-performing assets).

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