India: 1Q GDP to fall on seasonally adjusted sequential basis – Morgan Stanley

India’s economy is seen contracting on a seasonally adjusted sequential basis in the quarter ending June, as the local covid restrictions are likely to extend for a few more week, Morgan Stanley’s India economist, Upasana Chachra, said in her latest note.  

Key quotes

“Sequential growth has slowed as cases have surged in the second wave and local restrictions have been imposed.”

“That said, the intensity, duration and spread of restrictions are lesser this year, which cushions the impact on activity to some extent. We expect normalization in economic activity, a steady increase in the vaccination drive, favorable policy mix, and a robust global growth outlook to support cyclical recovery in subsequent quarters.”

“Expect India’s this FY growth at 11.5%, continues to expect the first lift in policy repo rate in the quarter ending December.”

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