Update: Aug 28, 2021 10:02 AM STI
Singapore, Aug 28 (ANI): Fitch Solutions predicts that real household spending in India will grow 8.9% year-on-year in 2021 after a 9.3% contraction in household spending estimated in 2020.
This marks the start of a recovery in spending, with total household spending in real terms expected to reach Rs 72.6 lakh crore in 2021, below 2019 levels (before the pandemic) of Rs 73.5 lakh crore.
As a result, Fitch said, the recovery of India’s consumer and retail sector will continue until 2022, when he expects real household spending growth to reach 7.1%.
“In 2022, we expect real household spending to reach a total of Rs 77.7 lakh crore. This is 5.8% more than total spending in 2019, indicating that a full recovery in consumer spending will have take place in India in 2022. “
In 2020, consumer confidence in India took a hit and fell to a five-year low of 49.9 (September 2020) and 97.9 (May 2020) for the Current Situation Index (CSI) and the Future Expectations Index (FEI) respectively.
Fitch said weak consumer demand has impacted credit growth as people postponed non-essential spending.
In July 2021, the Indian CSI scored 49 points despite the end of the latest wave of the Covid-19 epidemic, indicating that consumers have a grim view of the current and near-term economic situation that will weigh heavily on consumers. consumer spending.
However, the EIF tends to rise from a low of 96.4 in May 2021 to 104 in July 2021, suggesting that consumer spending on high-value items will likely be postponed until the the country’s economic and health situation is stabilizing.
“Our forecast for a full recovery in real consumer spending growth in India in 2021 is in line with our Country Risk Management team’s forecast that the domestic economy will experience 9% real growth, recovering from the 7.3% contraction recorded in 2020. “
Fitch said economic growth will be supported by consumer spending, reducing unemployment and continuing to invest in the country’s infrastructure sector, thereby creating more jobs.
“With India’s economy expected to fully recover in 2021, we believe more conventional growth models will return in 2022. As such, we expect the country’s economy to grow 7.6% in 2022.”
Fitch said the recovery in consumer spending in India in 2021 and 2022 will be supported by government stimulus measures adopted in 2020 and 2021. (ANI)