NEW DELHI: With the recent spike in coronavirus cases and the subsequent lockdown imposed by the government, Moody’s Investors Service on Friday slashed India’s growth forecast for 2020 to 2.5 per cent from 5.3 per cent earlier.
“The Governments of India has announced 21-day lockdown. For India, we are now projecting growth rate of 2.5 per cent in 2020, followed by 5.8 per cent next year,” the credit rating agency mentioned in its Global Macro Outlook 2020-21.
Moody’s added that in India, credit flow to the economy already remains quite hampered because of severe liquidity constraints in the banking and non-banking financial sectors.
The ratings agency expects the country’s economy to recover in 2021, estimating a growth rate of 5.8 per cent, but warned that uncertainty regarding the spread of virus and its containment makes it difficult to fully assess the economic toll of the crisis.
The Moody’s report stated that the G-20 economies will experience an unprecedented shock in the first half of this year and will contract in 2020 as a whole, before picking up in 2021.“We have revised our growth forecasts downward for 2020 as the rising economic costs of the coronavirus shock and the policy responses to combat the downturn are becoming clearer.
We now expect G-20’s real GDP to contract by 0.5 per cent in 2020, followed by a pickup to 3.2 per cent growth in 2021. In November last year, before the emergence of the coronavirus, we were expecting G-20 economies to grow by 2.6 per cent in 2020,” stated the report.
It had forecast China’s real GDP growth at 3.3 per cent in 2020, followed by 6 per cent growth in 2021. Slow improvement in consumer demand is expected to temper the pace of China’s recovery.
Growth predictions
5.3% GDP growth in 2020 was earlier forecast by Moody’s
5.8% growth forecast by the ratings agency for 2021