Moody ’s, just like any other credit rating agency is scared for India’s growth forecast as it went from 5.3% to 2.5% in barely 10 days. This happened after the Government ordered a nation-wide lockdown to reduce the spread of coronavirus. The 21-day lockdown announced by Prime Minister Modi has resulted in sharp loss for revenue and the demands are in pressure thus recovery would take time.
Moody said that the lockdown will dampen the economic growth in India, which was already facing issues like credit facility, stagflation etc. The credit flow is poorly damaged because of severe liquidity constraints by government to bank and non-bank financial sectors.
Global economy may contract to about 0.5% and will show no growth as relapsing the economy from the shut down is far more challenging. Government is spending along with the banking sector to keep up with the minimum demand.
All the countries have so far faced less growth in the forecast. China has assumed to grow 3.3% instead of 6.1% in the previous year. In November, the rating company had expected the global economy to grow by 2.6% this year. But as the economic crisis raised due to the corona virus, Moody the revised growth forecasts are for the advanced economies responses, coronavirus costs which has led to the downward economy.
Over the months, job losses will rise across the countries and the speed of recovery will depend on the revenue losses, unemployment and many such factors.
Fiscal as well as monetary authorities are taking measures to cope up with their respective economies and to the extent to be back on the edges.
There are significant uncertainties such as how long will the virus take to be fully gone and how much it is to be extended, till how long economic activity will remain disrupted.