Amid the global economic recession due to the coronavirus pandemic, foreign investors have pulled out an estimated $26 billion from developing Asian economies and over $16 billion out of India, a latest Congressional report has said, reported news agency PTI.
“Foreign investors have pulled an estimated $26 billion out of developing Asian economies and more than $16 billion out of India, increasing concerns of a major economic recession in Asia,” Congressional Research Service said in its latest report on global economic effects of COVID-19.
The report further added that in Europe, over 30 million people in Germany, France, the UK, Spain, and Italy have applied for state support, while the data from the first quarter of 2020 indicates that the eurozone economy contracted by 3.8 percent, the largest quarterly decline since the series started in 1995.
Moody's Investors Services has already cautioned that India's sovereign rating may be downgraded in case its fiscal metrics weaken materially.
In a report, Moody’s has also projected zero percent growth for the Indian economy in the financial year 2020-21.
CRS also said that in the US, preliminary data indicated that the GDP fell by 4.8 percent in the first quarter of 2020, the largest quarterly decline since the fourth quarter of 2008 during the global financial crisis.
“The IMF in its recent report argued that recovery of the global economy could be weaker than projected as a result of lingering uncertainty about possible contagion, lack of confidence, and permanent closure of businesses and shifts in the behaviour of firms and household,” the CRS said.
According to CRS, the pandemic crisis is challenging governments to implement monetary and fiscal policies that support credit markets and sustain economic activity, while they are implementing policies to develop vaccines and safeguard their citizens.
However, in doing so, the differences in policy approaches are straining relations between countries that promote nationalism and those that argue for a coordinated international response.
(With inputs from PTI)
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