Goldman Sachs on Tuesday lowered India’s growth forecast for April-June quarter from 33.4% year-on-year to 31.3%, according to CNBC. The investment bank cited lower consumption and services activity due to increased social restrictions to tackle the coronavirus.
Goldman expects a second wave of Covid-19 infections to slow India’s economic recovery in the three months between April and June
The investment bank expects Gross Domestic Product of India to contract sequentially by 12.2% quarter on quarter on an annualized basis for the three months ending June.
The hit from the April-June quarter will hurt India’s overall growth projection for the fiscal year, which Goldman expects to be 11.7%, down from a previous forecast of 12.3%
Analysts point out that the impact of the recent surge in cases could be limited if India avoids a national lockdown like last year.
Goldman expects activity to rebound sharply from subsequent quarters of July-September and beyond as India’s containment policy normalizes and vaccinations speeds up.
The bank cautioned of high uncertainties of its estimates and the actual impact could be larger or smaller depending on India’s virus containment policies.
Goldman expects the Reserve Bank of India to keep its policy rate on hold at 4% and maintain an accommodative monetary stance.