By Aditya Raghunath
Investing.com — In what is perhaps the sharpest downgrade from agencies and institutions, ratings agency Moody’s slashed India’s growth forecast to 9.3% from its earlier estimate of 13.7% for FY22.
Moody’s said the second wave of the COVID-19 virus will “slow the near-term economic recovery and could weigh on longer-term growth dynamics”.
It added, “The surge of the virus, which has been driven by a highly contagious variant, has put significant strain on India’s healthcare system with hospitals overrun and medical supplies in short supply.”
That said, Moody’s has raised India’s FY23 projection to 7.9% from its earlier forecast of 6.2%. It also raised India’s real GDP contraction in FY21 to 7.2% from its earlier estimation of 7%.
Moody’s says that the second surge will not have as severe an impact as the first wave did. “Unlike the first wave where lock-downs were applied nationwide for several months, the second wave ‘micro-containment zone’ measures are more localized, targeted and will likely be of shorter duration. Businesses and consumers have also grown more accustomed to operating under pandemic conditions,” it said.
Moody’s added, “As of now, we expect the negative impact on economic output to be limited to the April to June quarter, followed by a strong rebound in the second half of the year.”