The emergence of the Omicron variant of COVID-19 will pose a threat to India's economic prospects in the near-term, the Reserve Bank of India (RBI) has said. The emergence of the Omicron has caused panic across financial markets and has clouded the outlook on global recovery, the Reserve Bank said in its latest Financial Stability Report.

Though the level of GDP in July-September in India exceeded pre-pandemic levels for the first time, recent high-frequency indicators of economic activity suggest some loss of momentum in October-December, it said. Earlier this month the Central Bank  had projected the Indian economy to grow 6.6 percent in Oct-Sep, slower than the GDP growth of 8.4 percent in July-Sept. "The pace of the recovery remains uneven across sectors, inflation formation is being subjected to repetitive supply shocks and the outlook is overcast with global risks. Omicron haunts near-term prospects," the report said. Many state governments have started re-imposing curbs on movement with Omicron numbers rising fast in the country. Omicron cases in the country have climbed to 653 as on Wednesday.

 Even ahead of the Omicron scare, global growth had started to lose pace, hit by formidable headwinds from supply disruptions and bottlenecks, the report said, adding that globally bank credit growth is showing signs of gradual recovery, although flow of credit to lesser rated corporates continues to be tepid.

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