Morgan Stanley’s Chetan Ahya expects India’s Gross domestic product (GDP) growth to return to pre-COVID levels by Q1of FY22.
“That’s the time when the central bank should begin to think about taking back some of the extraordinary support that they are providing to the economy,” he said.
According to him, India’s GDP may contract by 5.7 percent in 2020 and rebound to 9.8 percent in 2021.
On global inflation, he said, “We are highlighting that there will be an inflation upside in developed markets, especially in the US, but in 2021 it will still be moderate inflationary pressures, not aggressive enough that the policymakers begin to tighten aggressively and slow down the growth.”
According to Ahya, RBI may look to unwind some monetary stimulus.
“There is no need for additional accommodation in monetary policy. The pullback should be done by RBI now,” he added.
Ahya expects emerging markets to see a good run for the next two years.
For the entire interview, watch video.