India is more resilient, but not immune to the second wave
The coronavirus resurgence in India is raising concerns that the recovery could be derailed. With state governments reluctant to reintroduce strict lockdowns, we think the economic impact will be much less severe than in Q2 last year.
What you will learn from this report:
- High frequency data point to a slowdown in growth momentum in Q1, which is already built into our forecasts. But these indicators are yet to show a sharp deceleration in response to the rapid increase in Covid case counts.
- Still, based on the international experience, the vaccination rate is far below the level required to contain the virus by itself. The second wave likely has some way to go both in height and breadth.
- If the health situation worsens substantially and tighter restrictions are reimposed widely, this would threaten our baseline forecast for H1.
Finland’s growth forecast cut amid weak confidence and soaring inflation
We have lowered our 2022 GDP growth forecast for Finland to 1.5% from 1.7% last month, as weakening confidence further dampens the outlook. We expect inflation to peak higher with a greater passthrough to core prices, squeezing real incomes and denting consumption. Russia has accounted for almost 10% of Finland's goods trade, among the highest in Europe.Find Out More
Why we see eurozone inflation slowing sharply next year
We have revised our 2022 eurozone inflation forecasts sharply higher, to 6.0%, since the start of the Ukraine war, as energy and food prices began to soar and new supply bottlenecks emerged. That said, we still see inflation decelerating sharply to 1.3% in 2023, putting us below consensus. While we recognise significant risks to our views, inflation should slow to below 2% in H2 2023.Find Out More