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India To Witness Worst Recession, GDP To Slump By 45%: Goldman Sachs
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India, 20 May 2020 10:40 AM GMT
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"Our estimates now imply that real GDP falls by 5 per cent in FY21 versus minus 0.4 per cent in our previous forecast," Goldman Sachs said in a report.
After Moody's, Nomura and India Ratings, United States-based multinational investment bank Goldman Sachs has now forecasted India's GDP to slump by 45%, expecting the worst recession so far
Goldman Sachs report has forecasted that India will experience its deepest recession yet, with a GDP slump of 45% expected in the second quarter with an estimate of real GDP falling by 5 per cent in the financial year 2021 running till next march. The economy contraction is far more than expected previously.
"Our estimates now imply that real GDP falls by 5 per cent in FY21 versus minus 0.4 per cent in our previous forecast. The minus 5 per cent growth we forecast for FY21 would be deeper compared to all 'recessions' India has ever experienced," Goldman Sachs said in a research.
"The deeper trough in our second quarter 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," the investment bank said in a note dated May 17.
Goldman Sachs had earlier projected the country's GDP to contract 20% in the second quarter and 0.4% for the financial year ended 2021.
Restarting the country's economy has continued to pose challenges, Goldman said, especially in containment "red zones", which account for about 45% of GDP.
Supply chains are improving, but are still operating at low levels, along with missing logistics and weak end-demand, according to the note."
American business and financial services company Moody's report says India may see 0% GDP growth this fiscal year. If nominal GDP growth does not return to high rates the government will face very significant constraints in narrowing the budget deficit and preventing a rise in the debt burden, Moody's said.
Another International Brokerage firm Nomura has cut steeply its FY2021 GDP forecast for India from -0.4 percent to -5.2 percent. Nomura expects India's GDP growth rate to fall by 5% in 2020.
"The government has aimed for maximum bang for minimum buck, with most of the relief either regulatory in nature or reflecting in its contingent liabilities rather than explicit budgetary support," a note by Nomura said.
Also Read: India's Economic Growth May Fall To 1.1 Per Cent In FY21: SBI Report
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