{"id":122734,"date":"2021-04-27T09:31:44","date_gmt":"2021-04-27T09:31:44","guid":{"rendered":"https:\/\/precoinnews.com\/?p=122734"},"modified":"2021-04-27T09:31:44","modified_gmt":"2021-04-27T09:31:44","slug":"indias-economy-will-likely-contract-this-quarter-as-covid-cases-soar-economists-warn","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/indias-economy-will-likely-contract-this-quarter-as-covid-cases-soar-economists-warn\/","title":{"rendered":"India&#x27;s economy will likely contract this quarter as Covid cases soar, economists warn"},"content":{"rendered":"<ul>\n<li>Sonal Varma, India chief economist at Nomura, said GDP will shrink around 1.5% in the current quarter, and there is &quot;downside risk&quot; to this estimate.<\/li>\n<li>Radhika Rao, an economist at DBS, said there will be a &quot;very clear deceleration&quot; compared to the previous trend.<\/li>\n<li>India is battling against a huge surge in Covid-19 cases, and multiple states have imposed partial lockdowns or stringent restrictions.<\/li>\n<\/ul>\n<p>India&#x27;s economy may shrink in the current quarter as Covid-19 cases surge, but the country could recover in the next one, according to two economists.<\/p>\n<p>On Tuesday, India reported another 323,144 cases, bringing the country&#x27;s cumulative infections to more than 17.6 million. That comes after the country reported five straight days of record new daily cases.<\/p>\n<p>Sonal Varma, India chief economist at Nomura, said the country is &quot;clearly going to see a sequential growth hit&quot; in its first quarter. India&#x27;s fiscal year begins in April and ends in March the following year.<\/p>\n<p>She predicts that gross domestic product will shrink around 1.5% in the current quarter, which ends in June. Varma added there is &quot;downside risk&quot; to this estimate.<\/p>\n<p>While there have been fresh lockdowns or curfews in some states, cases remain high and more restrictions are expected, Varma told CNBC&#x27;s &quot;Street Signs Asia&quot; on Tuesday.<\/p>\n<p>&quot;This is definitely going to impact activity in April and also in May,&quot; she said.<\/p>\n<p>Compared with the fiscal first quarter of 2020, however, the economy could grow more than 25%, she said. That&#x27;s because India&#x27;s GDP contracted nearly 24% in the same period last year.<\/p>\n<p>Radhika Rao, an economist at DBS, similarly expects a contraction from last quarter, but &quot;quite buoyant&quot; numbers compared with last year.<\/p>\n<p>She said there are &quot;significant base effects,&quot; and there will be a &quot;natural bump up anywhere between 20% to 23%&quot; in the quarter ending in June.<\/p>\n<p>&quot;But the sequential momentum will be very important, and that&#x27;s where I think you will see a very clear deceleration compared to the previous \u2026 trend,&quot; Rao told &quot;Squawk Box Asia.&quot;<\/p>\n<h2>Double-digit growth still possible<\/h2>\n<p>Nomura&#x27;s Varma said it&#x27;s important not to generalize the current quarter&#x27;s contraction as India&#x27;s growth outlook for the full year.<\/p>\n<p>The bank has cut its growth estimates for the year by around 1 percentage point so far.<\/p>\n<p>&quot;There is a downside risk to this number given the extended lockdowns we are seeing across states, but we do still think it&#x27;s going to be a double-digit growth for India,&quot; she said.<\/p>\n<p>Rao of DBS echoed the sentiment.<\/p>\n<p>&quot;We might still be able to eke out a double-digit growth,&quot; she said. DBS predicts that the economy will grow 10.5% for the full fiscal year ending in March 2022.<\/p>\n<p>&quot;I might have to bring it down by half a percent or 1% in the coming weeks, depending on how restrictive the restrictions are going to be,&quot; she said.<\/p>\n<h2>Economic recovery<\/h2>\n<p>Both Rao and Varma said that economic activity could start to recover relatively quickly.<\/p>\n<p>Rao said she expects &quot;some kind of recovery&quot; to begin in the July-to-September period.<\/p>\n<p>&quot;Last year&#x27;s example also showed that once the numbers start to peak off and recede, economic activity certainly tends to come back because of pent-up savings, because of pent-up demand,&quot; she said.<\/p>\n<p>Varma noted that there&#x27;s a &quot;big plan&quot; to ramp up on vaccinations after June.<\/p>\n<p>&quot;I think it&#x27;s more of a two-month, maybe three-month hit to sequential activity,&quot; she said.<\/p>\n<p>She added that the Covid restrictions are more targeted and localized now, compared with during the first wave of infections.<\/p>\n<p>&quot;We have enough anecdotal evidence of factories in the state of Maharashtra which are able to operate at 100% capacity despite the lockdowns,&quot; Varma said. Maharashtra is the epicenter of India&#x27;s second wave and contains financial capital Mumbai.<\/p>\n<p>&quot;It&#x27;s more concentrated in the services side, and the goods side of the economy does continue to do fairly well,&quot; she said.<\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/04\/27\/indian-economy-may-shrink-this-quarter-as-covid-cases-soar-economists.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sonal Varma, India chief economist at Nomura,<\/p>\n","protected":false},"author":3,"featured_media":122733,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>India&#x27;s economy will likely contract this quarter as Covid cases soar, economists warn - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/business\/indias-economy-will-likely-contract-this-quarter-as-covid-cases-soar-economists-warn\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"India&#x27;s economy will likely contract this quarter as Covid cases soar, economists warn - 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