"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 Research said in a report today.
Prime Minister Narendra Modi on Tuesday announced the nationwide lockdown to curb the spread of the virus till May 3. At 0.8%, India's GDP growth in 2020-21 will be the lowest in over four decades. Based on 2004-05 GDP series, this is the lowest GDP growth since (-)5.2% in 1979-80.
Barclays said the economic loss due to the pandemic could be close to $234.4 bln or 8.1% of GDP in 2020, assuming that India will remain under a partial lockdown at least until the end of May. The bank has cut its forecast for India's GDP growth in 2020 to 0.0% from 2.5% earlier.
"We also expect a weaker profile for recovery given the deteriorating global backdrop, and rising risk of COVID outbreaks leading to local-level shutdowns," the report said. Barclays has cut its forecast for GDP growth in 2021 to 7.5% from 8.0% previously.
The estimates continue to assume that the lockdowns end by early June, followed by a modest rebound in activity, reflecting inventory rebuilding across certain sectors, it said. India has so far reported 10,363 cases and 339 deaths on account of COVID-19.
