Extension of the nationwide lockdown in India till May 3 will cause an economic loss of around 234.4 billion dollars, which would result in stagnant GDP (Gross_domestic_product) for the year 2020, a British brokerage said on Tuesday.
It is worth noting that PM Narendra Modi extended the three-week lockdown till May 3, mentioning the need to contain the growth in coronavirus infections.
He did hint at relaxations in unaffected areas but added that this will be based on strict monitoring.
The brokerage firm Barclays had said earlier that the 21-day lockdown would likely have an economic cost of 120 billion dollars which is now estimated to balloon up to 234.4 billion dollars.
“As India heads into a longer complete shutdown until May 3 to combat the rising number of COVID-19 cases, the economic impact looks set to be worse than we had expected earlier,” the brokerage firm added.
Predictions by Moody’s Investors Service:
a) It sharply cut India’s growth forecast for the calendar year 2020 to only 2.5% from 5.3%.
b) According to Moody’s Investors Service, the lockdown will ‘dampen economic growth’ in India.
c) “In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors,” it added.
Estimates by the World Bank:
• Due to the detrimental impact of COVID-19, the World Bank estimates India’s GDP growth to plunge to 1.5-2.8% in 2020-21
• As per the World Bank, the South Asian region is anticipated to experience the region’s worst economic performance in 40 years.
• In this fast-changing scenario, the report presents a range forecast. It estimates that regional growth will fall to a range between 1.8 and 2.8% in 2020.
An intensifying health crisis has meant countries worldwide have effectively had to shut down, along with stringent measures placing a number of restrictions on the daily lives of hundreds of millions of people.
Earlier, the head of the International Monetary Fund has warned that the member states will suffer falling standards of living this year owing to the worst global economic crisis since the 1930s.
Apart from this, U.N. chief also warned that a global recession was a near certainty, “perhaps of record dimensions”. It is worth noting that markets have suffered huge losses since the 2008 financial crisis.
Policymakers across the world are reducing interest rates to stabilize their economies suffering from the adverse impact of disrupted supply chains and quarantined consumers.
With over 1.9 million infections and nearly 120,000 deaths, the epidemic has stunned the entire world, drawing comparisons with the tragic periods of World War II, the 2008 financial crisis & the 1918 Spanish flu.