Moody’s Investors Service on Friday slashed its estimate of India’s GDP growth during 2020 calendar year to 2.5 per cent, from an earlier estimate of 5.3 per cent and said the coronavirus pandemic will cause unprecedented shock to the global economy. The estimate for 2020 compares to 5 per cent economic growth in 2019.

In its Global Macro Outlook 2020-21, Moody’s said India is likely to see a sharp fall in incomes at the estimated 2.5 per cent growth rate, further weighing on domestic demand and the pace of recovery in 2021. “In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors,” it said.

Moody’s said the global economy will contract in 2020, followed by a pickup in 2021.

“We have revised our global growth forecasts downward for 2020 as the rising economic costs of the coronavirus shock, particularly in advanced economies, and the policy responses to combat the downturn are becoming clearer,” it said.

Moody’s now expects real GDP in the global economy to contract by 0.5 per cent in 2020, followed by a pickup to 3.2 per cent in 2021. In November last year, before the emergence of the coronavirus, the rating agency was expecting the global economy to grow by 2.6 per cent this year.

“Our forecasts reflect the severe curtailment of economic activity in recent days as the coronavirus has spread throughout the world,” it said.