India's Second COVID-19 Wave: More Cases, Smaller Economic Impact

With a rapidly rising caseload, India was at the epicenter of the global pandemic in May, accounting for about half of globally known new cases. As rapid as it went up, newly recorded cases are now declining.

The economic impact of the second wave is likely to be smaller compared to last year’s national lockdown, but it will add to further permanent output losses. GDP growth for the calendar year 2021 is forecasted at 9.3, reflecting the low base from 2020, while permanent output losses are estimated at 10% of prepandemic projected medium-term GDP. India’s pandemic is likely to have a mild impact on global oil demand given strong economic trends in other major economies, and ongoing vaccination campaigns that would ease COVID-19 related restrictions and increase mobility. However, India’s second COVID-19 wave may exercise negative pressure on oil prices as OPEC+ economies gear up to increase production by July 2021.