Goldman Sachs assumes that India will face it’s the deepest recession after a survey emphasized the pernicious effects of the lockdown on India’s economy.
Goldman had previously highlighted that there will be a 20% stagnation in the gross domestic product which has now increased to 45% in the second quarter from prior to three months. In the third quarter, there is a backfire of 20%. Still now the fourth quarter and first of the next year are standing at 14% and 6.5% respectively.
Estimations reveal that the GDP will drop down by 5% in FY2021 and this will be “deeper than any other recession India has experienced” said Goldman economists Prachi Mishra and Andrew Tilton.
Currently, India is under the fourth phase of lockdown starting from May 18 to May 31. Relaxations have been provided this time to stimulate economic activity as COVID- 19 cases surge in India. Finance Minister Nirmala Sitharaman announced a cumulative package of ₹20 lakh crore, almost 10% of India’s GDP for giving relief to all sectors of the country.
“There have been a series of structural reform announcements across several sectors over the past few days,” the Goldman economists wrote. “These reforms are more medium-term in nature, and we, therefore, do not expect these to have an immediate impact on reviving growth. We will continue to monitor their implementation to gauge their effect on the medium-term outlook”.