RBI First-Ever ‘Nowcast’ Reveals That India In Historic Technical Recession

For the first time in the history of the country, India's economy has shrunk for the second consecutive quarter, indicating a 'technical slowdown'. A team of economists, including Michael Patra, deputy governor of the Reserve Bank of India, in charge of monetary policy, have said the same in the first 'nowcast' of the central bank.

Nowcast is a prediction based on high-frequency data about the future state of the economy. Economists wrote that gross domestic product (GDP) was 8.6 percent in the quarter ended September (second quarter), with a decline of about 24 percent in the first quarter of the year.

"India experienced a technical slowdown for the first time in history in the first half of the period 2020-2021," economists said. Government data will be released by the government on 27 November.

In predicting future economic conditions, RBI economists focused on corporate performance during the recession. However, the team of economists said that if the recovery continues, India will grow again in the October-December quarter.

Economists have highlighted several positive economic indicators such as good vehicle sales growth and high banking liquidity.

However, economists have also written in the RBI bulletin that "normalization of inflation expectations, feeding in the loss of credibility in policy interventions," is a grave of normalization.

Economists also expressed concern over global growth due to the ongoing wave of fresh Kovid-19 infection.

The latest forecast comes at a time when financial services company Moody's has revised India's 2020 GDP target. Moody's is expected to decline by 8.9 percent compared to its previous forecast of 9.6 percent.