Omicron Won’t Stop Economic Growth, Jobs; RBI Says It’s A Flash Flood, Not Wave

By Malvika Gurung Last updated Jan 21, 2022

Despite headwinds from rapidly surging Omicron cases, the average demand conditions appears to be strong

The central bank Reserve Bank of India recently released its ‘State of the Economy’ report, as per which despite the rising global inflation and pressure on rising raw material prices and supply chain issues, customer confidence is looking upbeat and gradually returning in the domestic market.

The igniting financial markets in the country is a huge growth impulse in the consumer confidence gradually improving, states the report.

Some Highlights from the RBI’s ‘State of the Economy’ Report

The State of the Economy report is curated and published by RBi and it states that the trajectory of the new Covid-19 variant, Omicron, is on a declining curve, which has boosted the global expectation that the Omicron variant will be more of a flash flood than an impending wave.

Despite headwinds from rapidly surging Omicron cases, the average demand conditions appears to be strong, as consumer and business confidence remains upbeat, in addition to an increase in bank credit levels on aggregate.

Moreover, manufacturing activities and several other categories continue flourishing in an expansion mode.

“Data from the UK and South Africa suggest that such infections are 66-80% less severe, with a lower need for hospitalization. This has brightened near-term prospects and financial markets reflect this optimism,” stated the report.

Global Outlook Remains Unclear

While the global outlook remains clouded, given the surging inflationary pressures and disruptions in production, supply chains and transportation, the divergence between monetary policy stances across jurisdictions has widened, stated the report.

Despite these foreign indicators, RBI believes that it has made way for policies pushing growth.

There are indicators that burgeoning shipping costs and disruption in supply chains are all steadily easing, even though it is going to take time for inflation to fade away.

“This provides a window of opportunity to focus all energies on accelerating and broadening the global recovery,” added the report.