India’s Fight Against Coronavirus Will Come At ‘High Economic Cost’: Nomura’s Sonal Varma

India’s fight against the coronavirus pandemic will come at a “high economic cost”, according to Nomura’s Chief India Economist Sonal Varma, as state and central governments increasingly introduce social distancing measures which are likely to impact business activity and demand.

“The probability of social distancing measures extending beyond 15 days is high, so unless we see some plateauing out of the infection rate, we will see these lockdown measures and policy continue,” Varma told BloombergQuint in an interview.

The longer the measures continue, the larger the impact, she said. “Cash flows in businesses—especially in the services sector—and income wage of daily labourers will be impacted.”

As of Wednesday morning, India had nearly 150 coronavirus cases. Only 14 others have been cured. Maharashtra, India’s richest state, has seen a spike in the number of infections. In response, the state government has shut bars, clubs, gymnasiums, spas, schools and parks till March 31. All gatherings involving more than 50 people have also been discouraged.

Also Read: The Economic Impact Of Covid-19 On India

All countries, including India, will have to bear the cost of shutdowns to control the virus outbreak and to limit it from causing bigger problems, she said.

When asked about the magnitude of the cost, Varma said it is difficult to ascertain the impact until the infection rates peak out. At any rate, most countries other than China will see a larger economic impact in the second quarter than they did in the first quarter, she said.

On Wednesday, S&P slashed India’s GDP growth forecast for 2020 to 5.2 percent from the previous 5.7 percent, days after Moody’s lowered its expectation to 5.3 percent.

Also Read: Morgan Stanley, Goldman Declare Global Recession Under Way

WATCH | Nomura’s Sonal Varma On Covid-19’s Impact On India