S&P Global Ratings has cut India's Gross Domestic Product (GDP) growth forecast for the next financial year (FY21) to 5.2 percent from 6.5% estimated earlier, as it saw the outbreak of coronavirus costing economies around the globe. In the following year, it projects a 6.9 percent growth, down from 7 percent earlier for 2021-22. For the current fiscal which ends on March 31, it put the real GDP estimate at 5 percent. It also estimated a 7 percent growth in 2022-23 and 2023-24 fiscal years.
The global ratings agency put the total and permanent income loss for Asia-Pacific from COVID-19 at approximately $620 billion. It said this loss will be distributed across sovereign, bank, corporate and household balance sheets, but did not give country-wise break up its estimated loss. Besides, it noted that the inflation rate was seen moderating to 4.4 percent in the next fiscal as compared to 4.7 percent in the current. It would further drop to 4.2 percent in 2021-22 but rise to 4.4 percent in the following financial year and then to 4.5 percent in the year thereafter. It added that key policy interest rates are projected to fall to 4.25 percent in 2020-21 from current 5.15 percent but would rise to 4.5 percent in the 2021-21 financial year.
S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. It said ‘some government authorities estimate the pandemic will peak in June or August, and we are using this assumption in assessing the economic and credit implications.’ It also said the measures to contain COVID-19 have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers.