Moody’s on Monday slashed India’s growth forecast for 2020 to 5.4 per cent from 6.6 per cent projected earlier, on slower than expected economic recovery.
In its update on Global Macro Outlook, Moody’s Investors Service said India’s economy has decelerated rapidly over the last 2 years and economic recovery is likely to be ‘shallow’.
“While the economy may well begin to recover in the current quarter, we expect any recovery to be slower than we had previously expected. Accordingly, we have revised our growth forecasts to 5.4 per cent for 2020 and 5.8 per cent for 2021, down from our previous projections of 6.6 per cent and 6.7 per cent respectively,” Moody’s said.
Moody’s growth projections are based on calendar year and as per its estimates, India’s GDP grew 5 per cent in 2019.
The rating agency had in November 2019 projected economic growth in 2020 and 2021 at 6.6 per cent and 6.7 per cent respectively. In its latest update, Moody’s said the reduction in India’s growth rate reflects domestic challenges rather than external factors.
Stating that the key to stronger economic momentum would be the revival of domestic demand and bank credit growth, Moody’s said the Union Budget 2020 did not contain a significant stimulus to address the demand slump.