The Reserve Bank of India RBI has said that the global economy remains hostage to uncertainty because of the new virus strain, sparking fresh containment measures, as a result of COVID 19's new Omicron variant. It noted that surging infections, supply chain snags, logistic disruptions and inflation touched multi-year highs in several economies. The Indian economy bounced back strongly in the second quarter of FY 22, with gross domestic product GDP surpassing pre-pandemic levels and inflation broadly aligning with the target, the central bank said in its monthly bulletin released on Wednesday.
Consumer confidence is gradually returning after incoming high-frequency indicators are upbeat and consumer confidence is looking upbeat. The bulletin said that demand conditions point to sustained recovery, although there are some signs of sequential moderation.
On the supply front, the farm sector situation continued to be strong with impressive progress in rabi sowing, while the manufacturing and services had a strong improvement on strengthening demand conditions and a surge in new business, according to the bulletin.
The continued revival is driven by a combination of factors - release of pent-up demand, government push for capital expenditure, robust external demand and normal monsoon.
It said that consumers' confidence was brightened by a faster resumption of contact-intensive services and a speedy restoration of contact-intensive services.
The RBI bulletin stated that the new COVID-19 strain has tempered the momentum of global growth and trade, even as mounting inflation risks have brought forward policy normalisation timelines in several countries, because of the impact of the Omicron variant.
The World Health Organization warned that the Omicron coronaviruses variant, reported in more than 60 countries, poses a very high global risk, with some indications that it evades vaccine protection but clinical data on its severity is limited.
The WHO said earlier that considerable uncertainties surround Omicron, first detected in southern Africa and Hong Kong last month, whose mutations could lead to higher transmissibility and more cases of COVID- 19 disease.