Barclays cuts India's GDP forecast to zero citing lockdown extension
On Tuesday, Prime Minister Narendra Modi said in a televised statement that the nationwide lockdown will be extended till 3 May.
April 14, 2020 / 12:58 PM IST
For the first time perhaps, India has a zero percent Gross Domestic Product (GDP) forecast. Barclays emerging markets research has cut India’s calendar year 2020 GDP forecast to 0.0 percent from 2.5 percent earlier. Barclays has revised down its GDP growth forecast further to 0.0 percent for CY2020 (from 2.5 percent), and to 0.8 percent for FY20-21 from 3.5 percent earlier, Barclays said in a release.
As India heads into a longer complete shutdown (until May 3) to combat the rising number of COVID-19 cases, the economic impact looks set to be worse than we had expected earlier, Barclays said in a report.
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“Combined with the disruption in several service sectors, we now estimate that the economic loss will be close to $234.4bn (8.1 percent of GDP), assuming that India will remain under a partial lockdown at least until the end of May. This is much higher than the $120bn we had estimated earlier for roughly the same time period previously. As a result, we revise down our GDP growth forecast further to 0.0 percent for CY2020 (from 2.5 percent), and to 0.8 percent for FY20-21 (from 3.5 percent earlier).
On Tuesday, Prime Minister Narendra Modi said in a televised statement that the nationwide lock-down will be extended till 3 May. India just completed a 21-days lockdown announced in late March. Post -April 20, some areas may see partial relaxation depending upon the trend on virus infections, Modi said.
"Our estimates continue to assume that the lockdowns end by early June, followed by a modest rebound in activity, reflecting inventory rebuilding across certain sectors. However, if we are still seeing localised COVID outbreaks, which lead to frequent shutdowns, the scope for the economy to recover will continue to decline," Barclays said.Follow all of our coverage on Coronavirus here