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COVID-19

India's Economic Recovery Hinges on Controlling the Coronavirus Surge

Strategic Insights

— 1 min read

India's economic recovery is set to face significant hurdles unless the country can successfully manage the surge in coronavirus cases, according to Henry McKinnell, chairman of Moody's. The country's strict lockdown and swift reopening strategy have shown mixed results, with new cases exceeding 18,000 daily for the past five days. As the fourth-highest country for confirmed cases globally, India's economy, already struggling with low growth and financial sector stress, is at a critical juncture. With Moody's forecasting a 3.1 per cent contraction in 2020, the rating agencies have downgraded India's investment rating, highlighting the challenges the country faces in reviving its economy.

Key Takeaways:

  • India's economic recovery will be heavily dependent on controlling the coronavirus infection curve, according to Henry McKinnell, chairman of Moody's.
  • The country has reported over 18,000 new coronavirus cases daily for the past five days, making it the fourth-highest globally for confirmed cases.
  • India's economy was set to record its lowest level of growth in a decade even before the coronavirus pandemic struck, according to Moody's.
  • Rating agencies have downgraded India's investment rating, citing the challenges posed by the pandemic and financial sector stress.
  • Moody's expects India's economy to contract 3.1 per cent in 2020, with Prime Minister Narendra Modi's stimulus package aiming to revive growth.
  • S&P and Fitch also rate India one notch above junk, with Fitch lowering its outlook for the country to negative in May.

Statistics:

  • India has reported over 18,000 new coronavirus cases daily for the past five days.
  • As of last night, the total number of confirmed cases in India was 673,165, according to Johns Hopkins University.
  • India's economy was set to record its lowest level of growth in a decade, with Moody's forecasting a 3.1 per cent contraction in 2020.
  • The stimulus package announced by Prime Minister Narendra Modi in May was worth $266bn, or 10 per cent of gross domestic product.

Sources:

  • Stephens, Philip. "India struggles to revive economy as coronvirus cases surge." Financial Times, 20 May 2020.
  • Johns Hopkins University. "COVID-19 Dashboard." 20 May 2020.
  • Moody's Investors Service. "Rating Action: Moody's downgrades to Baa3, outlook negative for Government of India." 16 June 2020.

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