The economic wounds will be "deeper than anything we've seen
since World War Two", says chief economist at JP Morgan.
Global investment
bank JP
Morgan is forecasting a "very strong rebound" in Indian markets
for the second half of the year while it remains "worried" about what
it describes as deterioration in the country's public finances, social
disruption and the limits of public financing in the long slog back from the
coronavirus crisis.
"India is
going to be going through a very difficult first half of the year. We have GDP
down in the second quarter, 35 per cent annualised pace but we have a very
strong rebound in the second half of the year, but one that still doesn't get
you back to where you were," said Bruce Kasman, chief economist at JP
Morgan, news agency IANS reported.
Kasman leads a
team of thirty economists worldwide who set the bank's economic and policy views.
Globally too, JP
Morgan warned on Tuesday that whatever rebound happens in the second half of
2020 won't be strong enough to undo the damage absorbed during the first deadly
blow from Covid-19.
The economic
wounds will be "deeper than anything we've seen since World War Two",
Kasman said. "At the same time, it's going to be very short lived."
Kasman thinks the
Reserve Bank of India is "almost done but not completely done" with
the easing of its key interest rate.
"We have a
bottom in the policy rate forecast, 3.75 (per cent) very close to where we are
now, Kasman said.
India's central
bank has cut its key interest rate to 4 per cent to counter the economic blow
from the coronavirus
pandemic.
Income and job
losses are going to have a "lasting effect" on consumer behaviour,
Kasman said.
