India's economy shrinks at the fastest pace on record

London(CNN Business) India's economy contracted at the quickest pace on record in the second quarter, as lockdowns that were imposed to help control the spread of coronavirus decimated consumer spending and investment.

The economy shrank 23.9% in the three months ending in June, compared with the previous year, according to official statistics released on Monday. The slump in the world's fifth-largest economy was worse than economists expected, and one of the most severe contractions of any nation as a result of the pandemic.

Investment collapsed by 47% compared with the previous year, while household consumption contracted by nearly 27%, according to Capital Economics. Government consumption increased by 16%, but that wasn't enough to offset the sharp decline in activity in other sectors.

Shilan Shah of Capital Economics said the second quarter should mark the low point for India's economy, but there are signs the recovery could be very slow even though lockdown measures have been eased. A key measure of manufacturing activity edged lower in July, and output from infrastructure industries remains depressed.

"The continued rapid spread of the coronavirus will dampen domestic demand," said Shah. "What's more, the underwhelming fiscal response to the crisis will guarantee a legacy of higher unemployment, firm failures and an impaired banking sector that will weigh heavily on investment and consumption."

Once the fastest-growing major economy in the world, India limped into 2020 as consumer demand waned and the country's automotive sector struggled. Then coronavirus hit.

India has registered more than 3.6 million cases of coronavirus, according to data from Johns Hopkins University, and roughly 64,500 people have died from the disease. The numbers are rising quickly: It took almost six months for India to record 1 million cases, another three weeks to hit 2 million, and only 16 more days to hit 3 million.

Covid-19 has delivered a significant hit to every country's economy. Each member of the G7 — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — are officially in recession, for example.

The clear outlier among major economies is China, which catapulted into recovery mode in the second quarter following a drop in GDP between January and March, its worst performance over a three-month period in decades.

— Julia Horowitz and Swati Gupta contributed reporting.