COVID-19 was meant to be in retreat by now but in many countries — India, Japan, Thailand — it has staged a comeback.
India in particular was seen as this year’s growth leader with a 10%-plus rebound. Those hopes have been sunk by a second wave of the pandemic that has seen daily infections rise to the highest recorded anywhere. The central bank highlighted risks to the economy, with officials noting that “monetary and fiscal policies have already used most of their space”.
The rupee is down 2.7% against the dollar in April, a month when the greenback itself was weak, Indian stocks have logged a third week of losses and bad loan fears are mounting.
The impact will be felt globally, from commodities to consumer goods. Given India is the world’s third-largest oil user, crude prices are under pressure. Worryingly, the longer the crisis lasts, the greater the chances that new vaccine-resistant virus mutations will emerge.