In its latest estimates, Goldman Sachs expects India to see its deepest recession in April-June quarter as a damaging economic impact of lockdown to curb the spread of COVID-19 that has already infected over 91,000 people in the country.
GS estimates India's GDP (gross domestic product) to contract by an annualized 45 percent in the ongoing quarter when compared to the January-March period. Its previous forecast for the quarter was a 20 percent slump in GDP.
However, it expects India to make a strong rebound of 20 percent in the next quarter, while projections for the fourth quarter and first of next year are unchanged at 14 percent and 6.5 percent.
These estimates imply that the real GDP will fall by 5 percent in the 2021 fiscal year, which would be deeper than any other recession India has ever experienced, Goldman economists Prachi Mishra and Andrew Tilton wrote in a note dated 17 May.
These estimates come on the same day as the central government announced an extension in the nationwide lockdown to 31 May while easing some restrictions to boost economic activity even as COVID-19 cases continue to rise. It also follows the fifth and final tranche of announcement on details of the economic stimulus package of Rs 20 lakh crore by Finance Minister Nirmala Sitharaman.
"There have been a series of structural reform announcements across several sectors over the past few days," economists at Goldman Sachs were quoted in a Bloomberg report. "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."