Moody’s slashes India growth figure for 2020 to 0.2%

Moody’s said the economic costs of the coronavirus crisis amid the near shutdown of the global economy are accumulating rapidly.

Moody’s Investors Service slashed its 2020 growth forecast for the country from 2.5% to 0.2%, while rival Fitch Ratings warned on Tuesday that any deterioration in India’s fiscal outlook as a result of slower growth or fiscal easing could put downward pressure on its sovereign rating.

Moody’s said while the shape and magnitude of the initial shock is similar across economies, the recovery is likely to be more drawn out in some countries than others (Reuters)

Moody’s said the economic costs of the coronavirus crisis amid the near shutdown of the global economy are accumulating rapidly. “There are significant downside risks to our forecasts in the event that the pandemic is not contained and lockdowns have to be reinstated. Even without longer-duration lockdowns, a self-perpetuating dynamic could take hold, resulting in large-scale destruction of businesses and entire sectors, as well as a structurally high unemployment rate, a permanent loss of human capital, and persistent malaise in consumption and investment,” the rating agency said in its Global Macro Outlook update.

Moody’s said while the shape and magnitude of the initial shock is similar across economies, the recovery is likely to be more drawn out in some countries than others. “In particular, countries with weak economic fundamentals are likely to come out of this crisis with permanently depressed growth potential. Many emerging market countries fall in this category,” it added.