Citigroup Inc has lowered the forecast for India economy as the new infection of coronavirus cases still accumulating in a continuous manner. The country’s GDP will contract 6% at the end of this fiscal year by March 2021, more elevated than the previous projection of 3.5% decline. The revision is mostly due to a cut to the fiscal Q1 forecast, while the economy slumping 21% during the period against the previous estimation of 16%.
India has imposed the world’s largest lockdown with 1.3 billion people from the end of March and reopens parts of the economy months later to avoid a further slump in business and employment rate. The activation of economic activities increased the number of infections rapidly, making India home to the world's third-biggest count of cases.
Analysts said that the delay in an attempt to flatten the curve has been one of the primary reason for the revision, as the virus spread has largely followed the most serious scenario in the forecast. Citigroup’s estimate is more intense than Goldman Sachs Group Inc's prediction for a 5% contraction and the International Monetary Fund's projection of a 4.5% decline.
The Citi economists said that business and consumer sentiment is likely to remain weak in the Q2, and the rebound of economic activity to pre-pandemic levels is likely to happen in the Q3, but return to sustained earlier economic growth rates may take more time.
