New Delhi: After months of large-scale lockdowns in India, the world’s fifth-largest economy has witnessed its largest contraction on record. With the COVID-19 pandemic still sweeping the world, countries and regions may slow their overseas investment and further dim India’s economic prospects in the second half of the year.
Official data showed that India’s GDP in the second quarter slid 23.9 percent.
Drastic as that was, the figure was still within expectations due to a nation-wide lockdown that has hampered normal economic activities, together with the external pressure of the gloomy global economy.
Investment collapsed by 47 percent compared with the previous year, while household consumption dropped nearly 27 percent, CNN reported, citing data from independent consultancy Capital Economics.
As a major emerging economy, India has been a relatively favored market by foreign capital. Though foreign investment is expected to resume in the long run, the pandemic has made global investors reflect on their overseas strategies.
Weakening foreign investment will cast a shadow on India’s manufacturing sector, which is crucial for the country since the development of manufacturing could help the populous country to improve employment, eliminate poverty and improve its infrastructure.
Economic recovery in the second half of the year faces grimmer prospects, since India has seen surging confirmed COVID-19 cases, and New Delhi’s promotion of economic resumption has further pushed up infection risks.
With insufficient public health facilities, unless an effective vaccine could be rolled out, combating the virus and resuming economic momentum would not be easy for the country on its own.
Through months of poorly dealing with the virus, the Indian government has further exposed its insufficient administrative capacities. It is expected that the devastating economic outlook could force New Delhi to speed up reform to attract foreign capital after the pandemic.
–The Daily Mail-Global Times news exchange item
