Global banks predict resounding economic recovery

Global investment banks including Goldman Sachs and Morgan Stanley have sounded resounding optimism about India's economic recovery and have predicted a strong rebound next year as economic activity gathers momentum and vaccine deployment to fight the dreaded Covid-19 pandemic is undertaken. Goldman Sachs expects GDP growth to rebound to 13% in FY22 (above consensus expectations of 10.9%), after an expected 10.3% contraction in FY21. There is still a high degree of uncertainty around the outlook — and growth could overshoot or undershoot these forecasts — depending on the course taken by the virus and vaccine-related developments in the coming years. The US investment banking giant had earlier forecast the Indian economy to contract 14.8% in 2020-21 due to the bruising impact of one of the strictest lockdowns to ward off the spread of the deadly virus. The government's move to restart economic activity has seen a sharp improvement in several economic indicators and there are estimates now that the economy could move into positive territory in the third quarter — earlier than estimated. Morgan Stanley stated that it maintains a constructive view of the economy and expects growth recovery from the second quarter of 2021.