NEW DELHI, Nov 27 Reuters Indias economy is likely to have shown signs of a pickup in the quarter to September after a record contraction the previous quarter, and is expected to recover early next year on hopes of better consumer demand fed by progress on coronavirus vaccines.
Economists in a Reuters poll forecast gross domestic product in Asias third largest economy to shrink 8.8 in the September quarter, after a contraction of 23.9 in the previous quarter, amounting to a technical recession.
They also predict a contraction of 3 and growth of 0.5 in the December and March quarters respectively, with the economy shrinking 8.7 over the whole financial year for its worst performance in at least four decades.
Economists have marginally raised forecasts this month after a pickup in consumer demand for autos, nondurables and rail freight during the festival season, as prospects grow for COVID19 vaccines to be launched early next year.
Effective widespread distribution of vaccine could help speed economic recovery next year, said Shilan Shah, an India economist at Capital Economics in Singapore.
In particular, monthly data on capital goods production suggests that investment has bounced back more sharply than we had thought likely, he said in a note this week.
Despite improvement in the growth outlook, however, a recent surge in infections presents downside risks for the economy, said Shaktikanta Das, the governor of the Reserve Bank of India.
We need to be watchful…