S&P Global Ratings on Monday lowered India’s GDP growth to 5.2 per cent for the fiscal starting April 1, saying that the coronavirus pandemic has pushed the global economy into a recession. The agency had earlier predicted 6.5 per cent during the 2020 calendar.

It also said that the entire Asia-Pacific region will face total and permanent income loss of Rs 620 billion.

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“This loss will be distributed across sovereign, bank, corporate and household balance sheets,” it said but did not give country-wise break up its estimated loss.

It also said that it has revised estimates for real GDP, inflation and policy interest rates for Asia-Pacific nations.

As far as India is concerned, it estimated a 5.2 per cent growth in 2020-21 (April 2020 to March 2021), down from the previous estimate of 6.5 per cent. In the following year, it projects a 6.9 per cent growth, down from 7 per cent earlier for 2021-22. For the current fiscal which ends on March 31, it put the real GDP estimate at 5 per cent.

S&P estimated a 7 per cent growth in 2022-23 and 2023-24 fiscal years.

The rating agency said that the inflation rate was seen moderating to 4.4 per cent in the next fiscal from 4.7 per cent in the current. It would further drop to 4.2 per cent in 2021-22 but rise to 4.4 per cent in the following financial year and then to 4.5 per cent in the year thereafter.

It projected the key policy interest rates to fall to 4.25 per cent in 2020-21 from current 5.15 per cent but added that it would rise to 4.5 per cent in the 2021-21 financial year.

“S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak in June or August, and we are using this assumption in assessing the economic and credit implications,” it said.

The rating agency said the measures to contain the pandemic have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers. It also added that a recession across Asia-Pacific is now guaranteed due to a deep first-quarter shock in China and the shutdown of activities across G7 economies.

“S&P Global Ratings believe this, together with a loss of household and business confidence in these economies, will translate into severe and more persistent supply and demand shocks across the region. Unemployment rates will rise.”

Domestic demand will be hit almost everywhere by restrictions on movement and risk aversion. “External spillovers will be felt through four channels – people flows -travel, tourism, and education; trade-demand for the region’s exports; supply chains–disruptions to production; and commodity prices.”

Standard and Poor’s (S&P) joins a chorus of international agencies that have made a similar cut in growth estimates in recent days.

Fitch Ratings had on Friday slashed its growth forecast for India from 5.6 per cent to 5.1 per cent for 2020-21.

Moody’s Investors Service last week lowered India’s GDP growth forecast for the 2020 calendar year to 5.3 per cent from 5.4 per cent it had projected earlier.

The Organisation for Economic Cooperation and Development (OECD) has cut its 2020 growth projections for India to 5.1 per cent.

(With input from agencies)