New Delhi: Moody's Investors Service on Tuesday slashed India growth forecast for calendar year 2020 to 0.2 per cent, from 2.5 per cent projected in March.
For 2021, Moody's expects India's growth to rebound to 6.2 per cent.
In its report titled - Global Macro Outlook 2020-21 (April 2020 update), Moody's has lowered G-20 advanced economies as a group to contract by 5.8 per cent in 2020.
Moody's said the economic costs of coronavirus crisis amid the near shutdown of the global economy are accumulating rapidly.
It expects G-20 advanced economies as a group to contract by 5.8 per cent in 2020. Even with a gradual recovery, 2021 real GDP in most advanced economies is expected to be below pre-coronavirus levels.
Read more: Govt extends deadline to submit bids for Air India sale till June 30
China's economy is forecast to grow by 1 per cent in 2020.
"India extended a nationwide lockdown to 40 days from 21 days, but relaxed restrictions in rural areas to facilitate agricultural harvesting in the second half of April. The country has determined that many of these areas are free of the virus. India also plans a phased opening of different regions while continuing to carry out identification and contract tracing," Moody's said.
UBS projects negative GDP for India this year, lowest in four decades
India is likely to post a negative GDP growth rate in the financial year 2021, making it the lowest in four decades, according to an estimate by UBS.
It estimates that the Covid-19 shock-related mobility restrictions will drag FY2021 growth sharply. UBS is downgrading India's growth forecasts on a looming global recession and domestic economic activity being much weaker than expected due to the nation-wide lockdown imposed until May 3.
"We now expect India's real GDP to contract to -0.4 per cent in FY21 (previously +2.5 per cent), compared with 4.1 per cent year on year (previously 4.5 per cent) estimated in FY20. In our base case, we expect current mobility restrictions remain in place until mid-May and then get lifted, and activity is largely back to normal by end-June," UBS said.
In the alternative scenarios where virus containment fails, UBS estimates that disruptions could last longer and the economic weaknesses in the short term could intensify and the significant secondary impacts (job losses, reduced income levels, corporate defaults, rising NPLs, rating downgrade, etc.) could delay a potential recovery. "There is a risk India's real GDP could contract by a much larger magnitude of 3-4 per cent YoY," it said.
(With inputs from IANS and PTI)
