GDP shrank 8.6% in Q2 pushing economy into recession: RBI

‘Oct. data brightens outlook, but formidable risks ahead on the path to recovery ‘

India’s economy rebounded sharply in the wake of the reopening from lockdowns, slowing the pace of its contraction to 8.6% in the second quarter of the current fiscal year, the RBI ‘nowcast’ in its monthly bulletin released on Wednesday.

Still, the estimate implies that India is likely to have entered a technical recession in the first half of 2020-21 for the first time in its history with two successive quarters of GDP contraction, the central bank said.

“At a time when global economic activity is besieged by the outbreak of the second wave of COVID-19… data for the month of October 2020 have brightened the near-term outlook for the Indian economy and stirred up consumer and business confidence, ”The RBI noted. “There are, however, formidable downside risks that confront the path of recovery,” it added.

As per an economic activity index, which tracks real-time data from 27 monthly indicators, the economy rebounded sharply from May / June with the reopening, with industry normalizing faster than contact-intensive service sectors, pointing to a short-lived contraction.

“The index nowcasts GDP growth at (-) 8.6% in Q2, implying that India is likely to have entered a technical recession in the first half.”

Preliminary estimates showed a jump in household financial savings to 21.4% of GDP in Q1, up from 7.9% a year earlier and 10% in the preceding quarter.

“The sharp increase … may be attributed to the COVID-19-led reduction in discretionary consultation or the associated forced saving and surge in precautionary saving despite stagnant / reduced income,” the RBI said.

.

Disclaimer: This post has not been edited by our staff and is published from a syndicated feed. The Original Source of this post can be found at Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest

Parkash Singh Badal returns Padam Vibhushan in protest against ‘betrayal of farmers’

In a letter to the President, the former Punjab CM speaks of ‘shocking indifference and contempt with which the...

Paava Kadhaigal trailer: Netflix anthology looks dark and bold

Written by Manoj Kumar R | Bengaluru | December 3, 2020 3:08:03 pm Paava Kadhaigal will streaming on Netflix. (Photo: PR handout).Netflix on Thursday...

Google Maps, Search Getting Messaging Capabilities and Customer Insights

Google Maps is rolling out the ability for verified businesses to message customers directly from the app. Google Search will also be getting a...

More Articles