Rating agency Standard and Poor’s (S&P) has the 2020 growth projection for India to 5.2 percent from 5.7 percent. The agency fears that Asia Pacific region may tip into recession due to COVID-19 outbreak.
Moody’s and OECD (Organisation for Economic Co-operation and Development) had already cut their growth projections for India to 5.3 percent and 5.1 percent, respectively, for 2020.
In its report pertaining to the Asia Pacific, S&P revealed tthat loss of household and business confidence in the economies of the region will translate into major and more persistent supply and demand shocks while unemployment rates rise.
“Domestic demand will be hit almost everywhere by restrictions on movement and risk aversion,” it added.
S&P said Asia’s export drive will stall as few economies in the region will be secure by weaker demand in the US and Europe.
The rating agency also said 2.8 percent and 4.2 percent of India’s economy is exposed to final need from the US and EU, which is higher than the China’s share, making it more vulnerable to demand slump in developed economies.
Besides, S&P mentioned that the key uncertainty remains virus transmission.
“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,” it added.