Economy forecast to show an average growth of only 0.3 pc in two years
Economy forecast to show an average growth of only 0.3 pc in two years
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As India Enters First Technical Recession, the Indian economy is forecast to show an average growth of only 0.3 percent in two years, GDP could post a further decline in 3QFY21.

According to a report by Motilal Oswal Financial Services, “Real GDP declined 7.5 pc Year-on-year in 2QFY21 (or 3QCY20), worse than our expectation, but better than the market consensus”.  It further added Fiscal spending, consumption plus investments, posted its first major contraction since FY15 and is the worst on record. In contrast, the decline in private spending narrowed to -9.2 percent in 2QFY21 from -35.4 percent Year-on-year in 1Q. The government and private sectors are naturally highly interlinked with each other, the report said.

A comparison of India with other major nations suggests India is no longer the worst affected economy as the Philippines’ real GDP saw a double-digit decline in 3QCY20 and the decline was also higher in the UK and Mexico. Due to a weaker-than-expected 2QFY21, we revise down our 3QFY21 and 4QFY21 growth forecasts.

“We now pencil in a decline of 1.2 pc YoY in 3QFY21 and growth of 2.3 pc YoY in 4QFY21. Accordingly, India’s real GDP is forecast to decline 7.5 pc YoY in FY21, but grow 8.5 pc in FY22. This implies average growth of only 0.3 pc in the two years,” the report said.

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