Goldman Sachs Pegs India's GDP Growth Forecast at 10% for 2021, Highest Among Major Global Economies

Investment bank Goldman Sachs, its global economic analysis report ‘V(accine)-Shaped Recovery’, reiterated its projections for India’s gross domestic product (GDP) growth for 2021 and 2022 to be 10 per cent and 7.3 per cent respectively. The investment major’s growth forecast for India is the highest among major economies around the world.

In September, the lender had forecast India’s GDP growth for calendar year 2021 at 9.9 per cent and financial year 2021-22 at 15.7 per cent. The report, dated September 7, was published before the news of the Pfizer and BioNTech Covid-19 vaccine emerged as the most promising of all the vaccines in the works.

“Our growth forecasts in the emerging world in 2021-22 are mostly above consensus. The main exception is China, where output is already back to pre-pandemic levels, credit is growing rapidly, and fiscal policy remains very expansionary. Policymakers look set to react by easing off the accelerator, which should result in a modest sequential growth slowdown,” the report said.

The second wave of coronavirus infections that is now sweeping the United States and Europe, where governments have already reacted with renewed partial lockdowns, has created downside risks to global growth prospects, it added.

“This has led us to downgrade our October-December and January-March GDP estimates on both sides of the Atlantic; in fact, we now expect the European economy to contract significantly in Q4,” the report further said.

Just as the global economy rebounded quickly from the lockdowns earlier this year, the bank noted that the current weakness is expected to give way to much stronger growth when the European lockdowns end and Covid-19 vaccine becomes available.

“Assuming the FDA approves at least one vaccine by January and mass immunization of the general population starts shortly thereafter, as we expect, growth should pick up sharply in April-June. The apparent lack of scarring effects from the earlier GDP plunge is consistent with this view,” it said.

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