Economic confidence plummets as Indian economy fights Covid-19 pandemic

Accountancy experts say economic confidence in Q1 2020 has contracted significantly as the Indian economy struggles to get to grips with the fallout from the Coronavirus.

A national survey of an expert panel of senior accountancy practitioners, who reflect the outlook of many of the businesses they advise, found that confidence has fallen by 5% to -27, just 10 points shy of the country’s record low registered in the 11-year history of the research.

The report Global Economic Conditions Survey (GECS), jointly published by ACCA (Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) reveals:

• Global confidence fell to its lowest level on record with big falls in all regions

• The global orders index, which tends to be less volatile than confidence, also fell sharply

• Indian employment index holds up, yet investment index collapses

• India’s set to suffer a sharp economic contraction in coming months

Michael Taylor, chief economist at ACCA, revealed there was relatively little divergence in confidence between regions owing to the global nature of the coronavirus economic shock.

He said: ‘Indian economic sentiment is in line with the rest of the world. Confidence fell everywhere and, in most cases, sharply and to the lowest since the survey began in 2009.

‘India did not show a collapse in confidence in early March. India was suffering from weak growth prior to the pandemic and will quickly fall into economic contraction.

‘While this survey looks at the economic impact, it is important to remember there is a human cost both now and in the long-term on wellbeing, skills and the risk of redundancy.’

Mhd Sajid Aslan, head of ACCA India concludes: ‘The economic damage in coming months will be huge. The sheer scale of the current economic shock is bound to have long-term implications. Once confidence is restored, then this recovery should gather momentum, even if it is initially rather patchy. For now, the focus of economic policy is on preventing the COVID-19 pandemic from causing significant and permanent damage to the global economy. But if appropriate policy action is taken, then conditions for recovery will be in place when the COVID-19 health crisis is substantially over.’