India Economic Forecast

India Economic Outlook

August 25, 2020

The economy likely declined at one of the sharpest paces on record in Q1 FY 2020 (April–June) as lockdown measures remained in place for most parts of the country and, in turn, hammered economic activity. The private-sector PMI averaged significantly lower in the quarter compared to the previous period, indicating sharp deteriorations in the manufacturing and services sectors. Meanwhile, despite a softer contraction in industrial production in June, output fell severely in Q1 FY 2020. Turning to Q2 FY 2020, the economy remains gloomy, with the composite PMI for July dipping due to a sharper deterioration in the manufacturing sector, unemployment remaining elevated, and the threat of extended lockdown restrictions amid heightened new Covid-19 cases likely weighing on business and consumer confidence.

India Economic Growth

The economy is expected to contract sharply in FY 2020 due to containment measures hampering domestic activity, and amid anemic external demand. A major downside risk is a prolongation of lockdown measures. On a brighter note, fiscal stimulus and a more accommodative monetary policy should support the economy, although the rising fiscal deficit clouds the outlook. Our panelists project GDP to fall 5.0% in FY 2020, which is down 1.0 percentage point from last month’s forecast, and increase 7.6% in FY 2021.

India Economy Data

2015 2016 2017 2018 2019
Population (million)1,2831,3001,3171,3341,352
GDP per capita (USD)1,6331,7662,0182,0232,113
GDP (USD bn)2,0962,2952,6572,6992,857
Economic Growth (GDP, annual variation in %)8.08.37.06.1-  
Consumption (annual variation in %)7.98.17.07.2-  
Investment (annual variation in %)6.58.57.29.8-  
Industrial Production (annual variation in %)3.34.64.43.8-1.2
Public Debt (% of GDP)68.868.769.469.471.9
Money (annual variation in %)11.56.721.814.310.3
Inflation Rate (CPI, annual variation in %, eop)4.83.94.32.95.9
Inflation Rate (CPI, annual variation in %)4.94.53.63.44.8
Inflation (PPI, annual variation in %)-3.61.82.94.31.7
Policy Interest Rate (%)6.756.256.006.254.40
Stock Market (annual variation in %)-9.416.911.317.3-23.8
Exchange Rate (vs USD)66.2564.8665.1169.1975.34
Exchange Rate (vs USD, aop)65.4267.0464.4669.9170.91
Current Account (% of GDP)-1.1-0.7-1.8-2.1-  
Current Account Balance (USD bn)-22.1-15.2-48.7-57.0-  
Trade Balance (USD billion)-117.3-108.9-158.6-182.3-153.5
Exports (USD billion)262275305331314
Imports (USD billion)379384463513467
Exports (annual variation in %)-15.65.110.68.5-5.1
Imports (annual variation in %)-15.31.320.510.7-8.9
International Reserves (USD)356373421414476
External Debt (% of GDP)23.120.519.920.1-  

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India Facts

Value Change Date
Bond Yield6.50-0.04 %Jan 01
Exchange Rate71.23-0.09 %Jan 01

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