Finance giant Goldman Sachs forecasts a “Gigantic Downgrade” for India with predictions of the deepest recession in decades. Following the release of economic data from March to April 2020, Goldman Sachs revised their forecast of India for the current fiscal year with an estimated 5% contraction of the Indian Economy.
Speaking to CNBC, Prachi Mishra, the Chief economist of India at Goldman Sachs said that “ This is a really gigantic downgrade. A forecast of minus 5% for the year as a whole would be as deep as compared to the deepest recession India has witnessed since 1979”. According to the forecast by Goldman Sachs based on the recently released financial data by the Indian central government, the negative effect of COVID 19 on the economy will be at its worst between April-June 2020 with a forecast of 45% decline compared to that of 2019.
This report is further supported by a study conducted by IHS Markit, according to which India’s services activity collapsed last month with export rates falling by more than 36% while imports declined by over 47%. Ratings Agency Moody’s also warned of the imminent depression with a new report stating that the damages to the Indian economy will likely be “extensive and reflect (India’s) inherent economic vulnerability and fiscal constraints”.
The troubled South Asian state was already facing an economic depression prior to the lockdown due to the COVID 19 pandemic. Indian government’s decision to impose a nationwide lockdown without any recovery plans combined with political unrest due to the ruling parties prosecution of Muslim minorities has resulted in millions losing jobs with millions of small businesses closing due to bankruptcy.