Global forecasting firm Oxford Economics on Thursday revised downwards its India growth forecast over the medium term to an average 4.5 per cent over 2020-25, from its pre-pandemic projection of 6.5 per cent.
In a research note, it said India’s post-COVID-19 scars could be among the worst in the world.
“We forecast India’s growth equilibrium to worsen substantially over the medium term, with potential growth averaging just 4.5 per cent over 2020-2025 in our latest baseline, as opposed to our pre-virus forecast of 6.5 per cent,” Oxford Economics said.
It said an adequate and well-designed fiscal stimulus would halve this impact by limiting deterioration in pre-COVID-19 headwinds.
“But, given the low likelihood of such a comprehensive response, we project India’s GDP per capita to be 12 per cent below our pre-virus baseline even in 2025, implying the largest amount of scarring among major economies globally,” Oxford Economics said.
It added that the Indian government has announced various schemes and reforms this year, with an eye on the medium-to-long-term growth.
“However, its policy implementation track record is mixed and is likely to have been weakened further by recent social and institutional developments that detract from its capacity to focus on economic policymaking,” the global forecasting firm said.
Beyond 2020, Oxford Economics said India remains one of the most rapidly growing economies in our baseline.
“But, that is not enough to preclude a large medium-term output loss in the wake of COVID-19,” it said.
Oxford Economics said that even after the pandemic is contained, India’s economy will have to deal with its aftermath.