Corona effect: S&P cuts India 2020 growth estimate
Fearing that the Asia Pacific region may tip into recession amidst the COVID-19 outbreak, Standard and Poor’s (S&P) on Wednesday slashed its calendar year 2020 growth projection for India to 5.2% from 5.7%. The rating agency said loss of household and business confidence in the economies of the region will translate into severe and more persistent supply and demand shocks while unemployment rates escalate.
The agency said that said 2.8% and 4.2% of India’s economy is exposed to final demand from the US and EU, which is larger than the China’s share, making it more vulnerable to demand slump in developed economies. It stated “Our baseline global scenario, founded on expert scientific opinion and subject to high uncertainty was that the world would come to grips with the coronavirus at some point during the second quarter of 2020. We will review that baseline before fleshing out a new round of forecasts.”
Similarly, Moody’s and OECD (Organisation for Economic Co-operation and Development) too reduced their growth projections for India to 5.3% and 5.1%, respectively, for 2020.