Goldman Sachs is anticipating that India will witness its worst recession yet as its data pointed out to the adverse economic impact of the lockdown imposed to check the spread of the coronavirus outbreak. Gross domestic product is expected to shrink by an annualized 45% in the second quarter from the past three months in contrast to Goldman’s previous forecast of a 20% decline, Bloomberg reported.
A robust recovery of 20% is now likely in the third quarter. However, projections for the fourth and first of the next year remain unaffected at 14% and 6.5%.
Goldman economists Prachi Mishra and Andrew Tilton, in a note written on May 17, observed that these estimations indicate that the real GDP will drop by 5% in the 2021 fiscal year, which would be harsher than any recession India has seen before, the report added.
The Centre on Sunday extended the Covid-19 lockdown for two more weeks till May 31 while further easing of curbs in some sectors may help reboot the economy. The announcement came after Finance Minister Nirmala Sitharaman announced the fifth and final tranche of the Rs 20 lakh crore economic package to help the economy tide over the coronavirus pandemic.
“There have been a series of structural reform announcements across several sectors over the past few days. These reforms are more medium-term in nature, and we, therefore, do not expect these to have an immediate impact on reviving growth," Bloomberg reported citing the economists' note.
The economists added that they would continue to monitor their implementation to gauge their effect on the medium-term outlook.
Meanwhile, coronavirus cases continued to surge across the country. Maharashtra on Sunday recorded the highest daily spike of 2,347 COVID-19 cases, taking the state tally to 33053 cases, a health official said. With 63 more deaths, the death toll in the state is now 1,198, the official said.