What The Global Analysts Have To Say
GOLDMAN SACHS: INDIAN ECONOMY REBOUND BY 2021 Global rating agency Goldman Sachs has cut its estimates for growth in India's gross domestic product (GDP) for the current fiscal 2020-21 (FY21), but it expects the economy of the country to see a full-bound recovery by 2021. The research firm expects real GDP growth to contract 14.8 per cent in FY21 against its earlier estimate of 11.8 per cent contraction in this period. The agency, however, expects real GDP to bounce back strongly to 27.1 per cent on year-on-year basis in Q2 2021 (AprilJune 2021) due to favorable base effects. This is based on assumption that 70 per cent of the lost output in June 2020 will recover by June end of 2021. India's gross domestic product (GDP) contracted by a sharp 23.9 per cent in April-June period of the current fiscal. Some agencies have predicted negative growth even during the July-September quarter of the current fiscal (April 2020 to March 2021). Goldman Sachs has pegged average annual GDP growth in calendar year 2021 (CY21) and fiscal year 20212-22 (FY22) at 9.9 per cent and 15.7 per cent, respectively, against previous estimate of 3.8 per cent and 7 per cent. "Our forecasts assume that in level terms, real output in March 2022 would still be around 2 per cent below its level in March 2020," it said. IMF: INDIAN ECONOMY 8.8% GROWTH IN 2021 The IMF, in its latest 'World Economic Outlook' report, said that the Indian economy hit by coronavirus pandemic - is projected to contract by a massive 10.3 per cent this year, but it is likely to bounce back with an impressive 8.8 per cent growth rate in 2021. The revisions to the forecast are particularly large for India, where Gross Domestic Product (GDP) contracted much more severely than expected in the second quarter. As a result, the economy was projected to contract by 10.3 per cent in 2020, before rebounding by 8.8 per cent in 2021. In 2019, India’s growth rate was 4.2 per cent. If the Indian economy achieves the projected growth rate, it will regain the position of the fastest-growing emerging economy, surpassing China's projected growth rate of 8.2 per cent. According to the IMF, India is among those likely to suffer the greatest damage from global warming, reflecting its initially high temperatures. For India, the net gains from climate change mitigation-relative to inaction-would be up to 60-80 per cent of GDP by 2100. FITCH: INDIAN ECONOMY REBOUND OF 9.9 PER CENT IN FY22 Japanese research firm Nomura, Fitch Ratings and India Ratings also see hopes of recovery in FY22. India Ratings and Research, which pegged GDP to contract 11.8 per cent in FY21, has estimated a rebound of 9.9 per cent in FY22. Fitch Ratings expects India's economy to contract 10.5 per cent in the current fiscal before bouncing back in the next financial year. The economy, it said, will recover to 11 per cent in 2021-22 largely owing to base effect and grow by 6 per cent in the following year. WORLD BANK: INDIA'S GROWTH REBOUND 5.4% IN FY22 The World Bank projected India’s gross domestic product (GDP) to plunge in FY21 by 9.6% revised down since its June forecast of 3.2% drop, reflecting the impact of the nationwide lockdown and the income shock experienced by households and small urban service firms. Growth is expected to rebound to 5.4% in FY22, which assumes covid-related restrictions are completely lifted, but mostly reflecting base effects.The Indian economy contracted a record 23.9% in the June quarter, underlining the extent of economic damage brought about by the pandemic and the ensuing lockdown. Many forecasters now expect Indian economy to contract in double digits in FY21. The potential output is expected to remain depressed in the medium term and inflation is expected remain around the RBI’s target range mid-point of 4% in the near term. The covid-19 shock will lead to a longlasting inflexion in India’s fiscal trajectory. Assuming that the combined deficit of the states is contained within 4.5-5% of GDP, the general government fiscal deficit is projected to rise to above 12% in FY21 before improving gradually. Public debt is expected to remain elevated, around 94% (in FY23), due to the gradual pace of recovery.
Tags : EXPERT ZONE RBI growth GDP COVID-19 Indian economy Goldman Sachs