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MOODY’S CUTS INDIA GDP GROWTH FORECAST

Focus: GS-III Indian Economy, Prelims

Why in news?

  • Moody’s Investors Service sharply cut India’s growth forecast for calendar 2020 to 2.5% from 5.3% estimated barely 10 days ago after the government ordered a nationwide lockdown to curb the spread of the coronavirus.
  • The ratings company estimates a 5% growth for calendar 2019.
  • Global Economy may Contract 0.5%.

Highlights

  • A general lack of social safety nets, weak ability to provide adequate support to businesses and households, and inherent weaknesses in many major emerging market countries will amplify the effects of the coronavirus-induced shock
  • In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors.
  • The speed of the recovery will depend on to what extent job losses and loss of revenue to businesses is permanent or temporary.
  • There are significant unknowns, such as how long the virus will take to be fully contained and, by extension, how long economic activity will remain disrupted.



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