India’s economic outlook worsens amid soaring coronavirus cases – Reuters poll

According to the latest Reuters poll of economists, the Indian economic growth outlook remains in doldrums amid surging coronavirus cases, which will likely call for further easing by the Reserve Bank of India (RBI).

Key quotes

“In the quarter just gone by, the Indian economy is forecast to have shrunk 20.0% – the first double-digit contraction since official quarterly data started being released in the mid-1990s. It will then contract 6.0% and 0.3% in the current and following quarters, respectively, according to the poll.

That compared to a -5.2% forecast for the last quarter in the April 23 poll, followed by 0.8% and 4.2% growth in the current and next quarters, respectively.

For the current fiscal year, Asia’s third-largest economy is forecast to shrink 5.1%, a complete turnaround from the 1.5% growth predicted in the previous poll. It would be the weakest performance since 1979.

Under a worst-case scenario, the economy is forecast to have contracted 30.0% in the April-June quarter, and to shrink 10.0%, 4.0% and 9.1% in the current and next quarters and this fiscal year, respectively.

Inflation is expected to average 4.5% this fiscal year, and the RBI is forecast to cut the repo rate by another 25 basis points at its Aug. 4-6 meeting, and once more next quarter, to a record low of 3.50%.”

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