HSBC ups India's FY22 GDP forecast to 11.2%, cuts inflation target to 4.7%

 Besides India, HSBC has cut 2021 CPI inflation forecasts for Hong Kong, Indonesia, Japan, Singapore, Thailand, and Vietnam. In Korea and Malaysia, the upward revisions were marginal

A pick up in business activity coupled with a steady fall in COVID cases should aid a faster economic recovery across Asia, says a recent report by HSBC. It expects almost all economies in Asia to reach their pre-pandemic level by the end of 2021, if they haven’t already.

“The only exceptions are Japan and Thailand (next year), and the Philippines (beyond 2022). Encouragingly, we expect the rebound to have legs: growth in 2022 is likely to remain robust, still exceeding its pace in 2019, in all Asian markets, except for mainland China, Taiwan, and Vietnam,” wrote Frederic Neumann, co-head of Asian economics research at HSBC in a February 18 co-authored note.

As regards India HSBC has raised their growth forecasts from 9 per cent to 11.2 per cent for the coming fiscal year 2021-22 (FY22).

"By some measures, industrial activity is only a few percentage points below its pre-pandemic peak. Mobility, too, has largely recovered, which should help spur services demand, which is still 25 per cent below pre-pandemic level in the coming months," the HSBC report said.

Despite rising crude oil and auto fuel prices in India, the research and brokerage house has lowered the consumer price inflation (CPI) forecast for 2021 to 4.9 per cent and to 4.7 per cent for 2022. Besides India, HSBC has cut 2021 CPI inflation forecasts for Hong Kong, Indonesia, Japan, Singapore, Thailand, and Vietnam. In Korea and Malaysia, the upward revisions were marginal.

“Despite recent market jitters about rising price pressures – and we certainly share concerns about near-term volatility – the medium term outlook for inflation in much of Asia remains relatively benign,” Neumann wrote.