Moody's Cuts India's 2020 Growth Forecast To 5.4%

Coronavirus dents optimism just as global economy was starting to stabilise

- Shishir Sinha

Amidst indications of the deadly coronavirus hitting global growth, international rating agency Moody’s Investors Service on Monday lowered the estimate for India’s economic growth for 2020 to 5.4 per cent from 6.6 per cent.

In its February update titled ‘Global Macro Outlook 2020-21’, the agency said that India’s economic recovery will likely be shallow. It said that India’s economy has decelerated rapidly over the last two years.

Real GDP grew at a meagre 4.5 per cent in the third quarter (October-December) of 2019-20. Improvements in the latest high-frequency indicators such as Purchasing Managers’ Index (PMI) data suggest that the economy may have stabilised. While the economy may well begin to recover in the current quarter, we expect any recovery to be slower than we had previously expected, Moody’s said.

“Accordingly, we have revised our growth forecasts to 5.4 per cent for 2020 and 5.8 per cent for 2021, down from our previous projections of 6.6 per cent and 6.7 per cent, respectively,” it said.