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Moody's cuts India 2020 GDP forecast to 2.5%; global growth to dip to -0.5%

Friday,   27-Mar-2020   10:57 AM (IST)

Moody’s Investor Service (Moody’s) has slashed its economic growth forecast for India to 2.5 per cent for calendar year 2020 (CY20) even as it expects the growth to bounce back to 5.8 per cent in 2021 (CY21). At the global level, it expects a GDP growth of negative 0.5 per cent in CY20, before bouncing back in CY21. The downward revision in growth rates for CY20 comes in the backdrop of coronavirus (Covid-19) pandemic that has paralysed economic activity not only in India, but across the globe. Moody's expects the growth in G-20 economies to experience an unprecedented shock in the first half of 2020 and contract 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 real GDP to contract by 0.5 per cent in 2020, followed by a pickup to 3.2 per cent growth in 2021,” Moody’s said in a note. In November last year, before the emergence of the coronavirus, it had pegged the growth rate for G-20 economies at 2.6 per cent in 2020. That said, the agency expects policy measures to continue to grow and deepen, as the consequences of the shock in terms of depth and duration become clearer. However, downside risks to growth remain sizable, Moody's said.