Covid19 Restrictions And Partial Lockdown Likely To Impact Economic Activities

The restrictions and partial lockdowns in several states and cities amid rising Covid-19 cases are likely to impact economic activities in the current quarter (April-June), according to a Goldman Sachs report.

It said that the containment restrictions are likely to be more targeted with impact on specific services such as food and beverages, leisure and recreation, and transport, but with limited spillovers into other sectors such as construction and manufacturing.

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"While these restrictions are likely to hit activity in Q2, we think the activity is likely to rebound sharply from Q3 onwards as containment policies normalize," it said. "Consequently, our economists have revised down their overall CY21 real GDP growth forecast to 10.5 percent (from 10.9 percent previously) but remain above the consensus forecast of 9.4 percent."

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It also said that the domestic fiscal policy and government spending are likely to continue supporting growth in the coming months.

Globally, Goldman Sachs' economists remain optimistic about a rebound in global economic activities and expect very strong GDP growth in 2021. A strong recovery in global growth provides a supportive backdrop for India's macro and cyclical recovery too, it said. (IANS/SP)