India: Another extension, another GDP growth revision – Standard Chartered

Two-week extension of countrywide lockdown (albeit with further relaxations) is set to weigh on growth. Economists at Standard Chartered lower Indian GDP growth forecast for FY21 (year ending March 2021) to -2.0% from +0.7%. USD/INR is sitting at 75.715. 

Key quotes

“India has extended its countrywide lockdown by another two weeks until 17 May. Lockdown restrictions have been relaxed further relative to earlier phases. While this should boost the level of economic activity, the two-week extension will be a significant drag on growth.”

“We lower our FY21 GDP growth forecast further to -2.0% from +0.7%. On a calendar-year basis, we now forecast 2020 GDP growth at -4.6%, down from -2% previously and +5.3% in 2019.” 

“Economic activity in Q1-FY21 (quarter ending in June) is likely to be the weakest. We now expect a deeper GDP contraction of -22% y/y in Q1-FY21, versus our previous forecast of -10%. Given our downward revision for FY21, we now expect a sharper growth rebound in FY22, to 12% (9% previously).”