India’s economy is predicted to possess grown at a record pace within the three months that led to June — but analysts means that the info is unlikely to color a full picture of the country’s growth trajectory.
More than 40 economists polled by Reuters this month predicted that gross domestic product rose 20% on-year for the April to June period — India’s fiscal half-moon . Official data is due Tuesday around noon GMT. India’s financial year begins in April and ends in March subsequent year.
“The headline GDP growth number for April-June quarter … will flatter to deceive,” said Shuchita Shukla, a search analyst at The Economist Intelligence Unit.
If the 20% forecast is realized, it might be India’s fastest pace of growth since the country began measuring quarterly GDP in 1996. But, Tuesday’s data comes after India faced a pointy contraction within the comparable year-ago period, when most of the country was under a strict national lockdown. India’s economy contracted 24.4% during those three months.
Shukla said that the EIU’s year-on-year growth projection is above 25% — above the consensus estimate within the Reuters poll. “More revealing are going to be the quarter-on-quarter rate, which we expect to point out that India’s economy contracted by 7% amid a devastating second wave of Covid-19.”
In the three months between January and March, India’s economy grew 1.6% compared with a year earlier.
India battled a severe second wave of coronavirus infections between February and early May, when cases peaked. The resurgence forced most of India’s industrial states to implement localized lockdown measures to slow the spread of the virus.
But, India avoided a national lockdown. Economists said that probably cushioned the blow, but consumption likely still lost momentum.
“Humanitarian costs of the health crisis were immense, but the economic impact was less severe than the primary wave and activity rebounded faster,” said Radhika Rao, a senior economist at Singapore’s DBS Group.
She acknowledged during a note dated Aug. 23 that India’s agricultural output remained resilient, domestic tractor sales recovered in June and rural wages benefited from a spread of things including employment support schemes.
Construction activity remained somewhat operational, partially thanks to the more localized lockdowns, while some service sectors, like hotels, were more adversely affected than others.
“A full recovery in consumption is probably going to require time given pressured balance sheets going into the pandemic and extra labour market scarring during Covid,” Rao said.
Though India is opening up more cautiously following the second wave, economists say the danger of a 3rd wave remains. But its impact on the economy is predicted to be less severe compared with the primary and second waves. Some pockets of the country are experiencing upticks in infection, consistent with media reports.
EIU’s Shukla acknowledged that monthly data is showing that the Indian economy will likely return to decent quarterly growth during the July-September period.