[AspirantWorld Explained] Moody’s forecasts India’s GDP to shrink 3.1% in 2020

• Moody’s Investors Service has released its June update to Global Macro Outlook (2020-21).
• In its latest release, the rating agency projected the Indian economy to shrink 3.1% in the fiscal year 2020, citing the extent of coronavirus-related disruption.
• It also forecasts Indian economy to register 6.9% growth in fiscal year 2021.
• The global rating agency lowered its estimates for almost all major economies. For the G20 advanced economies, the report projected a contraction of 6.4% in 2020 followed by a 4.8% recovery in the coming year.

What is Moody Corporation?

• Moody’s Corporation, often referred to as Moody’s, is an American business and financial services company.
• It is the holding company for Moody’s Investors Service (MIS), an American credit rating agency, and Moody’s Analytics (MA), an American provider of financial analysis software and services.
• Founded by John Moody in 1909 to produce manuals of statistics related to stocks and bonds and bond ratings. Moody’s was acquired by Dun & Bradstreet in 1962.
• In 2000, Dun & Bradstreet spun off Moody’s Corporation as a separate company that was listed on the NYSE under MCO. In 2007, Moody’s Corporation was split into two operating divisions, Moody’s Investors Service, the rating agency, and Moody’s Analytics.
• Moody’s Investors Service and its close competitors play a key role in global capital markets as a supplementary credit analysis provider for banks and other financial institutions in assessing the credit risk of particular securities.

What does Moody’s rating say about the world economy?

• A general lack of social safety nets, weak ability to provide adequate support to businesses and households, and inherent weaknesses in many major emerging market countries will amplify the effects of the coronavirus-induced shock.
• Advanced economies are seen contracting 2% in 2020 against 1.7% growth in 2019 while emerging economies will slow to 1.9% from 4.2%.
• China is forecast to grow 3.3% in 2020 against 6.1% in the previous year.
• Moody’s expects real GDP in the global economy to contract by 0.5% in 2020, followed by a pickup to 3.2% in 2021.

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