India's gross domestic product (GDP) is expected to grow at 9 percent in the third quarter of FY22 owing to slowing economic momentum and Omicron uncertainties, Citi said in a report. The rating agency has downgraded the FY22E real GDP forecast from 9.8 percent to 9 percent. It has also revised the FY23E real GDP forecast to 8.3 percent year-on-year versus 8.7 percent estimated earlier.

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"While the economic impact of the Omicron wave in 4QFY22 could be much lower than previous waves, the activity momentum in 3QFY22 was much lower than our expectation," Citi said.

In comparison, the estimates released by the National Statistical Office (NSO) showed India's GDP will grow at 9.2 percent in the current financial year, against a contraction of 7.3 percent in 2020-21.

The third covid wave has started in India, with daily cases crossing 150,000 already, it said. "Although the case increase has been very sharp, there are reasons to be hopeful of a less-disruptive Covid wave," it said.

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The reasons include lower hospitalisation rates, shorter covid wave cycle period, higher vaccination coverage and weakening link between covid and economic activity, it said.

Mumbai has approximately 92k cases as of January 7 and the ICU beds (oxygen beds) occupancy stands at 760. During the second wave, however, at a similar level of cases, the ICU (oxygen) bed occupancy stood at over 2,800.

"While it is still early days and covid hospitalisation rises with a lag, policymakers would be hopeful (but cautious( of lower hospitalisation rates from Omicron, given the experience from South Africa," the report said. Weekly new hospitalisation in South Africa during as Omicron cases rose was much lower than previous waves, despite the higher caseload.

Also Read // India's first advance GDP estimate of FY22 at 9.2%; here's what experts have to say

(Edited by : Yashi Gupta)

First Published:Jan 10, 2022 12:28 PM IST