Global ratings and research firm Moody's has downgraded India’s growth outlook sharply by as much as 440 basis points. Their original number for gross domestic product (GDP) growth for the current year was 13.7 percent and now it has come down to 9.3 percent. The cut follows the lockdowns and restrictions resulting from the second wave of coronavirus.
However, it has maintained the rating — Baa3 negative.
Speaking in an interview with CNBC-TV18, Gene Fang, associate managing director-sovereign risk group at Moody's Investors Service said India is not the only country with mobility, but we expect a recovery in the second half of 2021.
He said improving the current account position will support India's ratings, but the recovery even in the H2 will not be robust enough.
“The improving current account position is one factor that does support India’s ratings and external vulnerabilities are very low in our view, but regardless of how the market takes it we will continue to be trying to provide ratings as accurately and as timely as possible to the market," Fang said.
While caution is seeping in countries like Singapore as well, the rating firm has updated only India's growth forecast.
“I wouldn’t say India is the only country experiencing a subsequent wave. We have seen a tighten lockdowns and restrictions in the Philippines, Thailand, Cambodia and even in Singapore the environment is getting more cautious with respect to restricting movement. So I wouldn’t say India is the only one but India is the first one or the most recent growth forecast that we have updated particularly with the impact of second-wave in mind.”
For the entire interview, watch the video