The Indian economy is the hardest hit among the major economies, US brokerage Goldman Sachs said on Tuesday, slashing its 2020-21 GDP forecast to a 14.8 percent contraction.
He had previously estimated that the country’s economy, which is now home to the second-highest number of Covid-19 infections, will contract by 11.8 percent.
The estimate comes days after official data indicated that the economy contracted 23.9 percent for the June 2020 quarter, compared to the level it was at in the prior year period, as activity in all sectors that exclude agriculture contracted due to blockades. The nearly two-month lockdowns cooled economic activity, but could not contain the number of infections, which stands at 40 lakh.
“India’s GDP (gross domestic product) was affected by Covid-19, the highest of the major economies,” analysts at the brokerage said.
They now believe the economy will contract 13.7 percent for the September 2020 quarter and 9.8 percent for the December 2020 quarter, compared to contractions of 10.7 percent and 6.7 percent, respectively, previously estimated.
“Our estimates imply that real GDP falls 11.1 percent in 2020 and 14.8 percent in fiscal year 21,” they added.
The 14.8 percent contraction in 2020-21 is one of the most pessimistic among all analysts so far.
Hours earlier, analysts at India Ratings and Research lowered their estimate to a contraction of 11.8 percent for 2020-21, while economists at the largest lender SBI now expect a contraction of 10.9 percent.
Like other analysts, the brokerage said there will be a strong rebound in 2021-22 due to the low base and estimated that GDP will register 15.7 percent growth in the next fiscal year.
Assuming that 70 percent of lost production in June 2020 is recovered in June 2021, they expect real GDP growth of 27.1 percent in the April-June quarter of 2021.
.
