“We expect consumption to be an important contributor to growth in 2022, as the economy fully re-opens driven by a notable improvement in the virus situation and adequate progress on vaccination. We also expect government capital spending to continue, see nascent signs of a private corporate capex recovery, and a revival in housing investment,” wrote Andrew Tilton, Goldman Sachs' chief Asia-Pacific economist in its recent Macro Outlook 2022 note, co-authored with Santanu Sengupta and Suraj Kumar.
For one, Goldman Sachs expects a rise in core inflation as manufacturers pass on input cost increases to consumers as demand recovers with full economic re-opening. As a result, the global research and brokerage house has pegged the headline consumer price inflation (CPI) in India at 5.8 per cent YoY in 2022 from 5.2 per cent in 2021.
Driven by higher oil and non-oil imports as the domestic economy re-opens and partly due to higher oil prices, analysts at Goldman Sachs expect India's current account deficit (CAD) to expand to $ 52 billion (1.5 per cent of GDP) in 2022 from $27 billion (0.9 per cent of GDP) in 2021.
The Reserve Bank of India, Goldman Sachs said, is likely to hike repo rates by 75 basis points (bps) in 2022 with the first repo rate hike in Q2-2022 and reverse repo hike of 40 bps by Q1 2022.
Fibre2Fashion News Desk (DS)