MUMBAI: India’s economy contracted 7.5 percent between July and September, the poorest among major advanced and emerging economies, entering a technical recession for the first time since independence.
Although an improvement on the record 23.9-percent contraction recorded last quarter, data indicates that Asia’s third-largest economy is in for a tough fight as it attempts to revive itself as coronavirus infections climb.
The two successive quarters of contraction mean the country has now entered a “technical recession” for the first time since 1947.
After virus-led lockdowns ravaged the globe, growth recorded by major economies including the US, Japan and Germany during the quarter ending on September 30 raised hopes India’s would grow too.
But, while consumer businesses saw a boost due to increased spending in the run-up to the October-November festive season, hopes of a broader recovery were dashed.
Farming continued to be a relatively bright spot, while manufacturing activity also increased during the July-September period after plunging nearly 40 percent during the previous quarter.
New Delhi has struggled to kick-start an economy expected to shrink 9.5 percent this year, according to estimates released by India’s central bank governor, Shaktikanta Das, last month.
The International Monetary Fund has meanwhile predicted that India’s economy would contract by 10.3 percent this year, the biggest slump for any major emerging economy and the worst since independence.
A report by Oxford Economics said India would be the worst-affected economy even after the pandemic eases, stating that annual output would be 12 percent below pre-virus levels until 2025.
India’s economy had struggled to gain traction even before the pandemic, and the hit to global activity from the virus and one of the world’s strictest lockdowns combined to deal it a severe blow.
The shutdown in the country of 1.3 billion people left many jobless almost overnight, including tens of millions of migrant workers in the shadow economy.
The government has since been easing restrictions to revive activity, announcing two stimulus packages to offer farmers easier access to credit and dole out benefits to small-scale businesses.
The relaxation measures have come even as the virus continues to rage, with more than 9.3 million infections, and over 135,000 deaths so far.
In a speech Thursday, Das warned the recent surge in virus cases and the imminent threat of new lockdowns posed further risks to the economy. “We need to be watchful about the sustainability of demand after the festivals and a possible reassessment of market expectations surrounding the vaccine,” Das said.
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