Goldman says India’s economy will shrink by 45%
Amy Casmin in New Delhi
India’s economy will shrink by 45 percent in the quarter of April-June compared to the same period a year earlier, overwhelmed by one of the most draconian coronaviruses in the world, which led to almost all economic activity, predicts Goldman Sachs in a new report.
However, the investment bank said the economy is likely to recover significantly – growing by 20% quarter-on-quarter in July-August – with constraints easing in the coming months. She then said recovery would be slower.
Overall, the bank forecasts that India̵
Prime Minister Narendra Modi announced last week a $ 266 billion “economic support package” to help revive the economy, but much of the support comes in the form of liquidity measures to encourage banks to lend to troubled companies with minimal additional fiscal incentives.
Bombay’s Sensex fell 2.2 percent in early morning trading due to disappointment of investors from the relief package
In his report, Goldman Sach called New Delhi’s support for economic recovery “fast compared to other emerging economies and far less than most emerging economies.”
At the end of March, Mr Modi’s government abruptly ordered the cessation of almost all economic activities, with the exception of food, pharmaceuticals and cleaning and hygiene products, in order to stop the spread of coronavirus.
Despite these stringent measures, the infection load in India continues to rise steadily, with no signs of decline as the virus spreads through densely populated slums and working-class neighborhoods. There are more than 95,660 confirmed coronavirus infections in India, which have so far claimed the lives of 3,000 people.
Mumbai and the highly industrialized states of Gujarat are hardest hit by the virus.
As the cost of the draconian blockade has become clearer, Mr Modi’s government is trying to ease restrictions to try to revive the fighting economy, while maintaining tight controls in certain detention areas with high levels of cases.