India’s economy is likely to have expanded at its slowest pace in at least eight years in the January-March quarter, partly as a result of the coronavirus clampdown, a Reuters poll predicted.

Asia’s third-largest economy began slowing last year, but a countrywide lockdown implemented by Prime Minister Narendra Modi on March 25 halted economic activity completely.

“Activity in January and February was strong, but the slowdown in March is likely to have largely offset those gains,” Aayushi Chaudhary, an economist at HSBC in Mumbai, said.

The poll of 52 economists, taken May 20-25, indicated India’s economy grew at 2.1 per cent in the March quarter from a year ago, its weakest since comparable records began in early 2012, and sharply slower than 4.7 per cent in the prior three months.

Forecasts for gross domestic product (GDP) data, due to be released on May 29 at 1200 GMT, ranged between +4.5 per cent and -1.5 per cent, underscoring the widespread uncertainty on the impact of the coronavirus on the economy at that stage.

While only six economists in the poll forecast a contraction during the first quarter, leading indicators for March already released have signalled a significant hit to GDP in January-March.

“Given the unprecedented collapse in activity in late March after the lockdown started, we think the economy will have contracted last quarter,” Shilan Shah, senior India economist at Capital Economics in Singapore, said.

“A prolonged period of restrictions, along with limited financial support means that India’s economy will contract this year for the first time in over four decades,” Shah added.

Policymakers have stepped up fiscal and monetary stimulus in response, but several economists said these would at best boost credit availability.

“The government’s latest stimulus package will serve only to cushion the blow over the long run, rather than help fill the shortfall in demand in the near term,” said Freya Beamish, chief Asia economist at Pantheon Macroeconomics.

“The extension of India’s lockdown until the end of May all but guarantees an unprecedented economic recession.”

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