India officially entered a technical recession last week. The National Statistical Office’s estimates for the Gross Domestic Product growt...
India officially entered a technical recession last week.
The National Statistical Office’s estimates for the Gross Domestic Product growth between July and September 2020 came in at -7.5%, meaning growth has been negative for two successive quarters, after the economy contracted a whopping 23.9% in the April-June quarter. That means India is officially in a recession.
Yet, despite this development and the massive contraction in economic output, the response to the numbers was surprisingly positive.
That is because observers were expecting worse.
The Reserve Bank of India had predicted a contraction of 8.6%. A poll of analysts by Reuters turned up a -8.8% figure. And some had pegged the number as high as -10%. Compared to that, a figure of -7.5% indicated that the the economy was actually doing better than most expected it to do.
Better than expected
“The second quarter GDP growth number is better than our expectation,” wrote Anagha Deodhar, an economist with ICICI securities. The Federation of Indian Chambers of Commerce and Industry called it a “pleasant surprise” and said it was proof that “the Indian economy is on a sharp recovery mode.”
The numbers also put India in a better position relative to many other countries, a turnaround from the quarter before when India’s -23.9% figure placed...
