Economists have predicted that India will face its worst recession ever as the country announced another nationwide lockdown extension. India’s economy is forecasted to contract 45% in the second quarter following the Rs 20 lakh crore coronavirus relief stimulus package which some economists call “aimless” and a “lost opportunity.”
Economists Predict Worst Recession Ever for India
Two leading global investment management firms, Goldman Sachs and Bernstein, have predicted that “India will experience its deepest recession ever,” according to reports. The forecasts came as the Indian government extended the country’s nationwide lockdown until May 31 while easing some restrictions to boost economic activity during the coronavirus crisis. India’s lockdown was introduced on March 25 and has been extended several times.
Goldman Sachs India Securities’ chief economist Prachi Mishra and chief Asia economist Andrew Tilton estimated in a report dated May 17 that India’s gross domestic product (GDP) will contract by an annualized 45% in the second quarter compared to the prior quarter. The firm previously forecasted a slump of 20% for the country with approximately 1.4 billion people. Goldman Sachs’ estimates imply that India’s real GDP will plunge by 5% in the 2021 fiscal year, deeper than any other recession the country has ever experienced. The economists explained:
The deeper trough in our Q2 forecasts reflects the extremely poor economic data we have received so far for March and April, and the continued lockdown measures, which are among the most stringent across the world.
Meanwhile, analysts at Bernstein have forecasted an even sharper contraction of 7% for India. As for the recovery, Goldman Sachs’ economists expect a rebound of 20%, stronger than previously predicted. Subsequent quarterly growth estimates were left unchanged at 14% and 6.5%.
