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Moody's slashes India GDP growth in 2020 to 2.5%
30 Mar '20
2 min read
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Moody's Investors Service today slashed its estimate of India's gross domestic product (GDP) growth during calendar year 2020 to 2.5 per cent from an earlier estimate of 5.3 per cent, saying the COVID-19 pandemic will cause unprecedented shock to the global economy. India is likely to see a sharp fall in incomes as a result, further weighing on domestic demand and the pace of recovery in 2021, it said.
"In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors," Moody’s said in its Global Macro Outlook 2020-21.
Moody's said the global economy will contract in 2020, followed by a pickup in 2021.
"We have revised our global growth forecasts downward for 2020 as the rising economic costs of the coronavirus shock, particularly in advanced economies, and the policy responses to combat the downturn are becoming clearer," it said.
Moody's now expects real GDP in the global economy to contract by 0.5 per cent in 2020, followed by a pickup to 3.2 per cent in 2021. In November last year, the rating agency was expecting the global economy to grow by 2.6 per cent this year.
"Our forecasts reflect the severe curtailment of economic activity in recent days as the coronavirus has spread throughout the world," it said.
"Financial sector volatility has exploded to levels last seen during the 2008 global financial stress, despite the expectation of rapid policy response from major central banks and governments," it said.
The severe compression in demand over the next two to four months will likely be unprecedented. Moreover, the widespread loss of income for businesses and individuals across countries will have a multiplier effect throughout the global economy.
"Over the next few months, job losses will likely rise across countries," Moody's said adding "the speed of the recovery will depend on to what extent job losses and loss of revenue to businesses is permanent or temporary," the rating agency was quoted as saying by Indian media reports.
Stating that it expects policy measures to continue to grow and deepen, as the consequences of the shock in terms of depth and duration become clearer, the rating agency said it is impossible to accurately estimate the economic toll of this crisis.
"In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors," Moody’s said in its Global Macro Outlook 2020-21.
Moody's said the global economy will contract in 2020, followed by a pickup in 2021.
"We have revised our global growth forecasts downward for 2020 as the rising economic costs of the coronavirus shock, particularly in advanced economies, and the policy responses to combat the downturn are becoming clearer," it said.
Moody's now expects real GDP in the global economy to contract by 0.5 per cent in 2020, followed by a pickup to 3.2 per cent in 2021. In November last year, the rating agency was expecting the global economy to grow by 2.6 per cent this year.
"Our forecasts reflect the severe curtailment of economic activity in recent days as the coronavirus has spread throughout the world," it said.
"Financial sector volatility has exploded to levels last seen during the 2008 global financial stress, despite the expectation of rapid policy response from major central banks and governments," it said.
The severe compression in demand over the next two to four months will likely be unprecedented. Moreover, the widespread loss of income for businesses and individuals across countries will have a multiplier effect throughout the global economy.
"Over the next few months, job losses will likely rise across countries," Moody's said adding "the speed of the recovery will depend on to what extent job losses and loss of revenue to businesses is permanent or temporary," the rating agency was quoted as saying by Indian media reports.
Stating that it expects policy measures to continue to grow and deepen, as the consequences of the shock in terms of depth and duration become clearer, the rating agency said it is impossible to accurately estimate the economic toll of this crisis.
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