Ancora, the second wave took its toll on the economy. India does not provide official quarter-on-quarter GDP data, but Capital Economics estimates that the economy shrank by 12% in the April-June period compared with the preceding three months.
“[Questo] contraction is… very large by historic standards, and sharper than we had been anticipating,” Shah added.
Anagha Deodhar, chief economist at ICICI Securities, said Tuesday’s annual growth figure was weaker than she was expecting.
“If you look at pre-pandemic levels, we are still a smaller economy by 3 trillion rupees ($ 41 miliardi),” Deodhar told CNN Business, adding that manufacturing, agriculture and exports have done well for the country recently. “Exports are driving growth mainly because global economy is recovering faster than the domestic one.”
Business activity has inched above pre-pandemic levels for the past three weeks, according to a Business Resumption Index compiled by Nomura, which tracks mobility indices, power demand and the labor force participation rate, among other metrics.
There are other positive signs as well: India’s vaccination rate has picked up, with the country on track to fully vaccinate about half of the population by the end of the year, Nomura analysts said.
But the economic recovery still faces threats over the next few months, as cases begin to rise again in the Southern Indian state of Kerala. The Nomura analysts said a potential third wave “cannot be ruled out,” especially with the festive Diwali season approaching.