India GDP Q1 2020


India: Economic growth slumps in January–March

May 29, 2020

Economic growth slowed in the first quarter of calendar year 2020 (the fourth quarter of fiscal year 2019), with GDP expanding 3.1% (Q4: +4.1% year-on-year), which is the slowest reading since at least 2012. The 3.1% reading was better than market analysts had expected, though, with 2.1% growth being the general expectation.

The Q1 reading is yet to fully take into account the economic effects of the national lockdown announced on 25 March due to the coronavirus pandemic; these effects will be more visible in the national accounts data for Q2 onwards.

Private consumption growth fell to an over five-year low of 2.7% in the first quarter (Q4: +6.6% yoy). Meanwhile, fixed investment declined at a sharper pace of 6.5% in Q1, down from the 5.2% decrease in the previous quarter. However, public spending ticked up marginally to a 13.6% increase in Q1 (Q4: +13.4% yoy).

On the external front, exports of goods and services contracted 8.5% in Q1, marking the worst reading since Q4 2015 (Q4: -6.1% yoy). Conversely, imports of goods and services declined at a slower pace of 7.0% in Q4 (Q4: -12.4% yoy).

Given that extensions to the national lockdown have been announced since it was first implemented, coupled with the effects of the global economic downturn, Kunal Kumar Kundu, India economist at Société Générale, said:

“We now expect 2Q20 to be a virtual washout, with the economy likely to contract by as much as 20.8% yoy. We see a further contraction in 3Q20, as rebooting the economy will likely take longer than expected.”

Our panelists see the economy contracting 0.2% in FY 2020, which runs from April 2020 to March 2021, which is down 1.6 percentage points from last month’s forecast. In FY 2021, our panel projects GDP to expand 7.2%.


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