Barclays Slashes India's 2020 GDP Growth To 'Zero' Over Economic Backlash Due To COVID-19

Combined with the disruption in several service sectors, the economic loss is estimated to be close to $234.4 billion or 8.1% of GDP, if lockdown lasts till May-end, according to the report.

15 April 2020 7:59 AM GMT / Updated : 2020-04-15T13:31:51+05:30
Editor : Shubhendu Deshmukh | By : Reethu Ravi
Barclays Slashes Indias 2020 GDP Growth To Zero Over Economic Backlash Due To COVID-19

Image Credits: News18

In the wake of India extending the nationwide lockdown till May 3, UK Bank Barclays slashed the country's growth forecast to 0 per cent for the calendar year 2020 from its earlier projection of 2.5 per cent. The report said that the economic fallout in the country will be worse than its earlier estimations.

Combined with the disruption in several service sectors, the economic loss is estimated to be close to $234.4 billion or 8.1% of GDP, if lockdown lasts till May-end, according to the report. The investment bank had earlier estimated India's economic loss to be $120 billion for roughly the same period.

"While India's COVID outbreak has not officially reached the community transmission stage, we believe the existing restrictions on movement are causing much more economic damage than anticipated. Despite being characterised as essential sectors, the negative impact of the shutdown measures on the mining, agriculture, manufacturing and utility sectors appears higher than we had expected," Barclays said in a report, according to Live Mint.

The report projected major economic losses for large industrial states such as Maharashtra, Delhi, Tamil Nadu and Punjab.

"This is a direct reflection of the high COVID case counts in these states, and lockdowns that are likely to persist across several sectors and for longer periods than in the rest of the country," it said.

Barclays added that even for states that are likely to experience a faster recovery cycle, such as Kerala, Karnataka, and Haryana, while their economic losses will likely be limited, a precautionary increase in savings and reduction in discretionary consumption, especially on travel and recreational services, will weigh on growth rates longer.

It further said that once the lockdown is over, the pace of recovery will be contingent on policy support by the government. If major policy interventions are taken, it could "change the outcome and bring about a faster upswing after the lockdown opens." However, the slowdown in early Q2 will be driven entirely by the shutdown and is unlikely to be affected by policy support.

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Reethu Ravi

Reethu Ravi

Trainee Digital Journalist

Reethu, a story teller, a person often found between the pages of a book or contemplating the nuances of life.

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Shubhendu Deshmukh

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Reethu Ravi

Reethu Ravi

Trainee Digital Journalist

Reethu, a story teller, a person often found between the pages of a book or contemplating the nuances of life.

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