Moody’s Investors Services said that most of the economies will not return to pre-pandemic activity levels until 2022. Last week, Moody revised its growth projections for India to grow at a significant 12.6%. According to its revised calculations, Moody’s Investors Services cast a dark shadow on the global growth prospects.
ON global economy, Moody’s stated that “The credit challenges arising from Covid-19 have been substantial, but the credit downturn likely will be relatively short-lived. Risks remain more significant for the sectors most vulnerable to restrictions on their normal activities,”.
The sectors which remain most vulnerable due to covid induced restrictions are namely, travel, leisure, hospitality and MSMEs that struggle to shore up their revenues due to partial restrictions active in the economy.
Stating the positives, Moody’s maintained that many countries like USA, India will be able to renew their economy, but with a pinch of reality added that most economies will not return to pre-pandemic activity levels until 2022. It stated that it expects a slow and bumpy global recovery given the uncertain vaccine drives and new mutations.
Though, it also positively stated that robust policy actions will continue to support economic activity and financial markets after the pandemic has eased. Policymakers will continue to support economic activity long after the pandemic has faded, in some cases for years, Moody’s said.
With the positive development of vaccine and the global initiative for fair vaccine distribution, Moody’s expects the incidence and prevalence of the pandemic to gradually decline over the course of this year. This in turn will allow governments who have imposed partial lockdowns in their economies to gradually ease its non-economic friendly measures.
However, a residual level of COVID-19 is likely to persist over time, raising the prospects of global risk in regions where vaccination progress is slow, and is facing frequent localized outbreaks.
In order to deal with the residual level of COVID 19 that may linger after its successful mitigation, Moddy’s added that “In addition, new mutations that increase the virulence or spread of the virus pose a key risk to efforts to normalize conditions. Rather than eliminating the virus, we expect to ‘learn to live with it’ at low case rates,”.