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S&P cuts India’s economic growth forecast to 5.2% for 2020 amid coronavirus outbreak

18 Mar 2020 Evaluate

In the wake of the coronavirus impact on the economy, S&P Global Ratings has cut economic growth forecast for India to 5.2% during the 2020 calendar year from 5.7% growth rate projected earlier. The agency said that the global economy is entering into a recession amid the coronavirus pandemic.

S&P Global Ratings stated that Asia-Pacific economic growth in 2020 will be more than halve to less than 3% as the global economy enters a recession. It added that an enormous first-quarter shock in China, shutdowns across the US and Europe, and local virus transmission guarantees a deep recession across Asia-Pacific.

By recession, S&P meant at least two quarters of well below-trend growth sufficient to trigger rising unemployment. It also said if lingering uncertainty results in a strong preference for US dollars, policymakers in Asia's emerging markets may be forced into a damaging round of pro-cyclical policy tightening.

It noted that the countries which are most vulnerable to capital outflows include India, Indonesia, and the Philippines. It said local measures aiming to support vulnerable sectors and workers may help but their effect will wane the longer the crisis lasts. It further said the timing of a recovery depends, most of all, on progress in containing the viral spread.

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