Leading investment banks revise GDP estimates for current fiscal – project less contraction

~ by Trinanjan Chakraborty

Leading experts have revised their estimates for the growth trajectory of the Indian economy in the pandemic hit current fiscal with most projecting better performance than earlier predictions. The Indian economy suffered a sharp contraction of -23.9% in Q1 (Apr-Jun) of the current fiscal as the pandemic induced lockdown brought almost all economic activities to a standstill. The Q2 numbers have not been formally announced but a bulletin issued by RBI last week indicates the 2nd quarter to also de-grow.

The projections by leading investment banks for the Indian economy are as below:

Both Goldman Sachs and Moody’s have reduced the extent of contraction as forecasted in September. Only Barclay’s increased their prediction of contraction marginally. All of them though are in agreement that the economy is likely to be at pre-Covid levels by Q4 2021 and expect a rapid recovery in fiscal 2022. The downward revision of the projected contraction by Goldman & Moody’s is in reflection of the most recent round of stimulus announced by the Government and signs of economic recovery observed in the last couple of months. While the investment banks remain bullish on growth in 2021-22, the same is largely linked to mass availability of an effective vaccine ensuring no further road-blocks for the economic recovery.

Last month, the RBI had announced that it expects a 9.5% contraction in the economy in FY21.

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