India’s GDP will contract by 8.9% during the current April-March financial year instead of a previous forecast of 9.6%, according to Moody’s Investors Service.
The ratings agency has also revised up the nation’s projected growth for the next financial year to 8.6% from a previous forecast of 8.1%.
The global economic recovery over the coming year will be highly dependent on the development and distribution of a coronavirus vaccine, effective pandemic management as long as the virus remains a public health risk, and government policy support, Moody’s said.
G-20 economies are expected to collectively contract by 3.8% in 2020, followed by 4.9% growth in 2021 and 3.8% growth in 2022, it said.
The pandemic could have long-term consequences regarding inequality, geopolitical alignment, climate change policies and technological transformation, it added.
“Looking ahead, we expect advanced economy central banks to actively hold down yields across all maturities and to expand asset purchases to include a wider range of assets if the economic backdrop remains difficult,” said Madhavi Bokil, vice-president at Moody’s,
“For most emerging market countries, the scope for additional rate cuts is limited and we do not expect emerging market central banks to carry on with quantitative easing measures once the recovery strengthens,” she added.
The economic shock from the pandemic comes as the world is grappling with multiple challenges ranging from climate risks, a reassessment of the merits of globalisation and increased social disaffection.