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Indian economy to rebound after COVID-19: IHS Markit

25
Jul '20
Pic: Shutterstock
Pic: Shutterstock
The Indian economy is likely to rebound in the second half of this year as the impact of the novel coronavirus pandemic recedes, and is projected to grow by 6.7 per cent in the next fiscal, according to IHS Markit, whose survey recently showed economic momentum improved in June, reflecting the easing of Covid-19 related restrictions during May and June.

"The severe negative impact is expected to result in a significant contraction in GDP in the April-June quarter of 2020, resulting in a recession in the 2020-21 financial year with GDP expected to contract by 6.3 per cent year-on-year," it said in its outlook on the Indian economy.

The IHS Markit Purchasing Managers' surveys for India showed that despite the negative short-term shocks from the pandemic, total foreign direct investment (FDI) into India has remained buoyant. FDI by technology firms in the first seven months of 2020 has already reached around $17 billion, boosted by the $10 billion new investment announced by Google in mid-July.

"IHS Markit forecast that the Indian economy will rebound as the impact of the pandemic recedes, with improving economic growth momentum in the second half of 2020 and positive GDP growth of 6.7 per cent in the 2021-22 financial year," said Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit.

Facebook, Amazon, and Foxconn are among the other global technology firms that have committed large new investments into India this year, the company said.

"A major boost to investor confidence in the Indian medium-term economic outlook has come from new foreign direct investment into India announced during 2020 by US technology companies like Google, Facebook, and Amazon," Biswas was quoted as saying by a news agency.

IHS Markit said the medium-term economic outlook for India remains favourable, supported by a number of key growth drivers.

"An important positive factor for India is its large and fast-growing middle class, which is helping to drive consumer spending. Total Indian consumer spending is forecast to grow by 42 per cent between 2020 and 2025, measured in USD terms at constant prices," it said.

IHS Markit forecast India's consumption expenditure to double from $1.6 trillion in 2020 to $3.2 trillion by 2030, measured in constant prices, boosted by strong average annual GDP growth and rapidly rising per capita incomes for the country's fast-growing middle-class urban households.

"The digital transformation of India that is currently underway is expected to accelerate the growth of e-commerce, changing the retail consumer market landscape over the next decade. This is attracting leading global multinationals in technology and e-commerce to the Indian market," Biswas said.

Fibre2Fashion News Desk (DS)


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