The government will release the GDP data for April-June quarter today. This data will confirm the extent of damage done to the Indian economy by coronavirus pandemic and subsequent lockdowns. Amid expected dismal GDP figures, the question is how bad the numbers will be. According to rating agencies and economists, the economy will shrink by 16-25 per cent in the April-June quarter.
State Bank of India has predicted 16.5 per cent contraction in GDP in the first quarter, while CARE ratings said the economy could shrink by 20.2 per cent. Similarly, Barclays said the economy would contract by 25.5 per cent, while Goldman Sachs has said the Indian economy would see its worst performance by shrinking about 45 per cent in the first quarter. ICRA said the 'lockdown' quarter will see a GDP and GVA contraction at 25 per cent each YoY. India Ratings and Research also believes the severity of COVID-19-led business disruptions will lead to a negative growth of 17.03 per cent.
In all, most economists and rating agencies have predicted GDP contraction of 16 and 25 per cent in the April-June quarter. If this turns out to be true, it will be the worst quarterly GDP numbers ever recorded since India started compiling GDP data on quarterly basis in 1996.
As per the 'Economy Watch' report of consultancy firm EY India, Q1 will record the worst GDP growth in current financial year. However, the growth will see some rebound in Q2 and subsequent quarters.
India's GDP growth was slowing even before COVID-19 outbreak. The country's GDP grew at 3.1 per cent in the final quarter of financial year 2019-20, lowest in 44 quarters. The overall growth for FY20 slumped to 4.2 per cent, which was also the lowest since FY09 when GDP was 3.09 per cent.
Global economies have also seen the worst growth numbers in recent quarters. The United Kingdom (UK) reported the biggest decline in GDP among the world's top 20 economies with a 20.4 per cent contraction in Q1 and France's GDP shrank by a record 13.8 percent in Q2. Germany's GDP shrank 10.1 per cent in Q1, while Japan registered a de-growth of 7.6 percent in the April-June quarter. International Monetary Fund (IMF) has predicted the global economy will shrink by 4.9% in 2020 as business activities remain affected due to COVID-19.
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