India is expected to see double-digit expansion in the three months ending in June — but economists warn that the data won’t be painting the full picture of the country’s growth trajectory. South Asia’s largest economy released fourth quarter GDP data Monday that showed an expansion of 1.6% from the same period a year ago, driven mostly by state spending and manufacturing sector growth. Full year GDP is estimated to have contracted 7.3% compared to a 4% growth in the previous year.
Since February, India has been battling a devastating second wave of coronavirus that accelerated in April and peaked in early May. The infection forced most of India’s industrial states to implement localized lockdown measures to slow the spread of the virus. For the April-June quarter last year, the economy contracted 23.9% as a months-long national lockdown hammered the country. Economists argue that while the reported year-on-year figure for the current quarter will likely show a double-digit growth, the strong number will be due to the low base from last year’s negative print.
Still, experts agree that the economic impact of the second wave may not be as severe as the one seen last year. India has, thus far, avoided another national lockdown, allowing states to implement localized shutdowns instead. Economists agree that the country is generally on track to revive its growth but at a delayed pace. Data is likely to show that consumption lost momentum this quarter on a sequential basis due to the second wave as households had to prioritize more of their spending on hospitalization and medical expenses, Rao explained.
Many economists have trimmed their full fiscal 2022 growth predictions for India. Goldman Sachs, for example, lowered its full-year real GDP growth forecast from 11.1% to 9.9%.
India will likely see double-digit growth this quarter, but economists warn it’s not the full picture, CNBC, Jun 2