S&P Global Ratings on Wednesday lowered
India's economic growth forecast to 5.2 per cent for 2020, saying the global
economy is entering a recession amid the coronavirus pandemic.

IMAGE: A sparse crowd is
seen at the Chhatrapati Shivaji Maharaj Terminus, the nerve centre of Mumbai’s
business district, on March 17, 2020, as offices resort to work from home due
to the coronavirus pandemic.
The agency
had earlier projected a growth rate of 5.7 per cent during the 2020
calendar.
“Asia-Pacific
economic growth in 2020 will more than halve to less than 3 per cent as the
"global economy enters a recession", S&P said in a
statement.
"An
enormous first-quarter shock in China, shutdowns across the US and Europe, and
local virus transmission guarantees a deep recession across Asia-Pacific,"
said Shaun Roache, chief Asia-Pacific economist at S&P Global
Ratings.
By recession,
S&P meant at least two quarters of well below-trend growth sufficient to
trigger rising unemployment.
"Our
estimate of permanent income losses is likely to at least double to more than
USD400 billion," said Roache.
As per the
statement, external shocks from the fallout of the global viral spread add a
new dimension. People flows from the US and Europe will be decimated for at
least two quarters, heaping more pressure on the tourism industry.
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, Roache said.
The countries
most vulnerable to capital outflows remain India, Indonesia, and the
Philippines, he added.
"We
lower our forecasts for China, India, and Japan for 2020 to 2.9 per cent, 5.2
per cent and -1.2 per cent (from 4.8 per cent, 5.7 per cent, and -0.4 per cent
previously)," S&P said in the statement.
The global
policy response, including the Federal Reserve's policy-rate cut to zero and
the Bank of Japan's scaled-up asset purchases, will help cushion but not
quickly reverse these shocks, 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.
Even if major
progress is made during the second quarter, after a sustained period of
stressed cash flow many firms will be in no position to resume investing
quickly, the S&P said.
Households
that have either lost their jobs or have worked fewer hours will spend less and
banks will be busy managing the deterioration in asset quality, it said.
On Tuesday,
Moody's Investors Service had lowered India's economic growth forecast for 2020
to 5.3 per cent (from 5.4 per cent), on coronavirus impact on the economy.
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Economy