Moody's revises India's 2020 GDP forecast to -8.9% from -9.6%, raises 2021 forecast to 8.6% from 8.1%

Moody’s raised its forecast for India’s growth to -8.9% for the calendar year 2020 from -9.6% and for the coming year as well to 8.6% from 8.1% earlier, in its Global Macro Outlook 2021-22 report on Thursday.

The decline in new infections along with high recovery rates are bending the pandemic curve and allowing for further easing of restrictions on mobility, it said, adding that the test positivity rate in India has fallen below 5%.

“We therefore forecast a gradual improvement in economic activity over the coming quarters. However, slow credit intermediation will hamper the pace of recovery because of an already weakened financial sector,” Moody’s said.

Further, if these trends in the pandemic curve continue to spur greater mobility and social interactions, coupled with the development and dissemination of a vaccine, it could make the pandemic itself a less important macro factor in 2021 and 2022, it said.