Covid Restrictions to Hit Economic Activities in Apr-Jun: Goldman Sachs

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.

"While these restrictions are likely to hit activity in Q2, we think activity is likely to rebound sharply from Q3 onwards as containment policies normalise," it said.

"Consequently, our economists have revised down their overall CY21 real GDP growth forecast to 10.5 per cent (from 10.9 per cent previously) but remain above the consensus forecast of 9.4 per cent."

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 the global economy 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.