In its latest Global Macro Outlook released on Tuesday, Moody’s Investors Service said India’s economic recovery would face a difficult trajectory amid an unfavorable real economy and weak banks.
“India’s gross domestic product (GDP) will contract 3.1% in 2020 and grow 6.9% in 2021, in line with its June forecast.
Maintained its global forecast of 4.6% GDP contraction for 2020.
The rating agency said in its benchmark projections that China, India and Indonesia would be the only emerging economies in the G-20 to post a sufficiently strong recovery in real GDP in the second half of 2020 and full year. 2021 to end next year above before. coronavirus levels.
Coronavirus-related supply disruptions have resulted in higher food prices in several emerging countries, including India, but this is a temporary phenomenon. He expects the current shock to be broadly disinflationary.
Politically, the central banks of all major economies will pursue easy monetary and financial conditions for several years. The extraordinary economic slowdown and low oil prices provide a benign outlook for inflation over the next two years.
As the impact of current measures fades over time, fiscal policy will continue to evolve. Beyond fiscal measures designed to cope with the cyclical shock, deep structural reforms would go a long way to stabilizing potential growth.
In fact, keeping potential growth close to pre-crisis levels would require growth-friendly reforms. In addition, although there are implementation risks, infrastructure development by accelerating existing projects could stimulate growth in these countries. “
Amid bleak growth prospects and the general rebound in the US dollar, the Indian rupee is losing ground on Wednesday.
USD / INR is rising 0.25% to 74.35, at the time of writing, after hitting a daily low of 74.22.