Coronavirus Outbreak: GDP to decline to 1.6% as key sectors to witness fall in business, says Goldman Sachs

On 20 March, Fitch had projected India''s GDP growth for 2020-21 at 5.1 percent, lower than 5.6 percent estimated in December 2019.

FP Staff April 09, 2020 10:19:50 IST
Coronavirus Outbreak: GDP to decline to 1.6% as key sectors to witness fall in business, says Goldman Sachs

With the uncertainty over the lockdown withdrawal continues in the wake of rising coronavirus cases in the country, Goldman Sachs estimates that India's GDP growth may decline to 1.6 percent this financial year comparing with its earlier projection of 3.3 percent, said a news report.

American multinational investment bank and financial services company said that growth in the India's economy is expected to dip to at least three decades low because the major sectors will witness a sharp decline in business during the 21-day lockdown period and a likely staggered exit from those restrictions, said BloombergQuint citing a report titled An Unprecedented Sudden Stop for India.

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Representational image. PTI

Goldman Sachs lowered its growth forecast for the second time now as before the local spread of the pandemic cases the research house had pegged growth at 5.8 percent in FY21, the report said.

“This is a gigantic 420-basis-point downgrade,” BloombergQuint quoted Prachi Mishra, chief India economist at Goldman Sachs, was quoted as saying in an interview.

Early this month, Fitch Ratings had said it slashed India''s growth forecast for the current fiscal to a 30-year low of 2 percent, from 5.1 percent projected earlier, as economic recession gripped global economy following the lockdown due to COVID-19 pandemic.

"The initial disruptions to regional manufacturing supply chains from a lockdown in China as the coronavirus spread have now broadened to include local discretionary spending and exports even as parts of China return to work.

On 20 March, Fitch had projected India''s GDP growth for 2020-21 at 5.1 percent, lower than 5.6 percent estimated in December 2019.

On 3 April, NR Bhanumurthy, a Professor at the National Institute of Public Finance and Policy (NIPF), said that Indian economy, which was already in slowdown phase for the last six quarters, could register the lowest growth in the post-reform period in 2020-21 despite strong monetary and fiscal stimulus measures.

He said that with the current lockdown, the state of the Indian economy aggravated further.

"With the current lockdown, the current situation in the Indian economy, which was already in slowdown phase for over six quarters, has actually aggravated further.

Early this month, Asian Development Bank said in its outlook that India's economic growth might slow down to 4 percent this fiscal on the back of the current global health emergency during the financial year 2020-21.

Growth in India will remain subdued after the country suffered a sharp slowdown last year, from 6.1 percent in fiscal 2019 to 5 percent, as a credit crunch that originated in the non-banking financial sector severely hampered bank lending, the Manila-based lender said.

-- With inputs from agencies

Updated Date:

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