Recession ahead? India GDP To Plunge To 1.6% in FY 21

Recession ahead? India GDP To Plunge To 1.6% in FY 21

As a major economic crisis is expected to unfold and the threat of financial downfall looms large, Goldman Sachs India unit has predicted that the GDP of India would plunge to 1.6 percent in 2020-2021 financial year owing to Corona Virus pandemic. The economists at Goldman said that the FY 21 going to witness the lowest GDP growth rate ever in India. This is going to be further low compared to its earlier projection of 3.3 percent for FY 20-21.

In a report titled 'An Unprecedented Sudden Stop for India', the research house forecast that the key sectors would see a sharp decline in business which already began with the 21-day lock down.

"The 1.6% growth for FY21 would be deeper compared to widely perceived 'recessions' India experienced in the 1970s, 1980s and in 2009," Prachi Mishra and Andrew Tilton said in their report. "This is a gigantic 420-basis-point downgrade," they added.

Besides India, several other economies of top countries would also witness steep fall. Goldman's forecasts predict that the Global GDP growth will contract by 2 percent. United States GDP will contract by 6.2 percent. And the worst effected would be Europe as Eurozone GDP is expected to contract by 9 percent.

The spread of virus, fear among consumers and businesses, social distancing and nation-wide lockdown have all escalated sharply in the last two weeks. Citing these, the report said there would be a significant contraction in economic activity. It further predicted that the impact would be much higher compared to the previous recessions.

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