India's spending helps fuel growth but risks from Omicron variant loom

 The South Asian nation remains on track to post the fastest growth among major economies as most sectors, including services and exports, show momentum

India’s effort to boost consumption through government spending and low-interest rates is paying off, with the economy gaining strength just as a new coronavirus variant emerges as the top threat to a global recovery.

The South Asian nation remains on track to post the fastest growth among major economies as most sectors, including services and exports, show momentum. Gross domestic product will expand 9.3% in the fiscal that ends March, according to a Bloomberg survey of economists, a touch faster than the 9.2% forecast last month.

The recovery is “led by the services sector, with individual mobility back to pre-Covid levels, and ultra-accommodative financial conditions,” as well as higher government expenditures, said Gaura Sen Gupta, an economist with IDFC First Bank in Mumbai, forecasting growth of 10% this year.

While she said it’s too early to predict the impact of the omicron strain, the cost of lockdowns has been falling as they become more targeted and shorter.

Official data due later Tuesday will likely show GDP in the July-September quarter grew 8.3% from a year ago, according to the median estimate in a Bloomberg survey. That’s slower than 20.1% growth in the previous quarter -- which largely reflected a bounce back from last year’s crash -- but marks a fourth straight quarter of expansion.