Goldman Sachs gives India’s growth forecast a ‘gigantic downgrade’

CNBC reports that the extended period of lockdown in India due to the coronavirus outbreak is set to take a toll on the country’s growth outlook, according to investment bank Goldman Sachs. 

The bank revised its growth prediction this week for the full fiscal year in India that began in April and will end in March 2021. Gross domestic product is expected to contract by 5% for the year, worsening from the bank’s earlier prediction of a negative 0.4% growth. 

“This is a really gigantic downgrade,” Prachi Mishra, chief India economist at Goldman Sachs, told CNBC. “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.” 

India’s first-quarter GDP data is expected next week and the outlook remains bleak among economists.

The South Asian country was already facing an economic slowdown before the virus outbreak pushed the government to impose a nationwide lockdown that began in late March and has subsequently been extended multiple times at least until the end of May. Economic activity grounded to a halt as a result, affecting millions of small businesses as well as large corporations, while millions of people lost their jobs. 

India now has over 118,000 cases of infections and more than 3,500 people have died, according to the health ministry.