InvestorQ : What does the US economy contracting by 5% mean for India?
sarah Leo made post

What does the US economy contracting by 5% mean for India?

Answer
user profile image
PK answered.
5 months ago


A few days ago, when talking to an the assembled chief ministers of India’s states, Prime Minister Narendra Modi declared that he wanted India to be a “$5 trillion economy” by 2024, when he once again faces reelection. This would, he said, be “challenging, but achievable.”
Modi could never be accused of lacking ambition, but the fact is that getting India’s GDP to $5 trillion in five years will be far more challenging than achievable.


user profile image
vidhya Laxmi answered.
5 months ago


It is the fastest pace of contraction since the Lehman crisis of 2008 as the US economy contracted by 5% in the March 2020 quarter. This is much sharper than analyst estimates. This is also the sharpest since the 8.4% fall in the fourth quarter of 2008 and it is feared that the June quarter could be substantially worse despite strong consumer spending. In fact, most of the GDP pressure came from the supply side due to limited investments by companies. Estimates for Jun-20 quarter are as bad as 40% contraction. However, government agencies do expect a sharp revival in GDP growth in the September quarter. For the sectors like IT that depend heavily on US tech spending, that may not be great news.


user profile image
Prithvi Ram answered.
5 months ago


Professional forecasters veered towards a consensus that India’s economy will face its worst recession in 40 years, contracting by at least 5% this fiscal, a day before the statistics department releases the March quarter GDP print, which will partially reflect the unfolding impact of the pandemic on the economy.
On Thursday, S&P Global Ratings said the Indian economy will contract 5% in FY21, assuming that the ongoing outbreak in India will peak in the September quarter while Swiss bank UBS said India’s economy could shrink 5.8% during the current financial year amid weaker-than-expected domestic economic activity and the ongoing global recession. Earlier, S&P’s Indian arm Crisil, Fitch Ratings and Goldman Sachs projected India’s economy to contract 5% in FY21.