Moody’s Expects Economy to Contract by 3.1% in 2020

Moody’s Investors Service expects India’s economy to contract by 3.1% in 2020 compared with 0.2% growth it projected in April. The rating company expects a stronger economic rebound for India at 6.9% in 2021, as opposed to 6.2% estimated in April, according to the June update of its Global Macro Outlook released Monday.

China is among the few G20 countries expected to register growth in 2020, according to Moody’s, which maintained its earlier forecast of 1% for the country.

Global economic recovery will likely be prolonged and the second quarter of 2020 “will go down in history as the worst quarter for the global economy since at least World War II,” it said.

Growth estimates for almost all major economies were lowered. For the G20 advanced economies, the report projected a contraction of 6.4% in 2020 followed by a 4.8% recovery next year. In April, Moody’s had projected a 5.8% contraction for G20 this year.

For G20 emerging economies, it projected a contraction of 1.6%. Excluding China, the estimate would have been -4.7%, it said.

Growth projections for most major western economies were lowered further. The effect of lockdowns on activity in the second quarter would be larger than previously thought, Moody’s said.

“We have revised our 2020 growth forecast down from our previous projections in April for a number of countries, including Germany, France, Italy, the UK, Canada, Brazil, India, Indonesia, Saudi Arabia and Argentina… The downward revisions for 2020 mostly reflect a reassessment of the effects of the pandemic in the first half of the year, based on incoming data,” the report said. The report includes a second wave of Covid-19 infections in its baseline scenario.

No comments: