Moody's sees India's GDP contracting 3.1% in 2020, says India-China tensions suggest rising geopolitical risks

Ratings agency Moody's on June 22 said that it sees India's GDP contracting to 3.1 percent in 2020 and growing 6.9 percent in 2021.

It also said that the second quarter of the current fiscal will go down as the worst quarter for global economy since World War 2, although it will start improving from the beginning of the second half of 2020.

The ratings agency said that of the G20 countries, it sees only China posting growth in 2020. Moody's said it sees China growing at 1 percent in 2020 and 7.1 percent in 2021.

Moody's said it expects G20 economies to contract by 4.6 percent in 2020, and grow by 5.2 percent in 2021.

The rating agency's Global Macro Outlook report also touched upon the tensions between India and China at the Line of Actual Control (LAC).

"The Asian countries are particularly vulnerable to changes in geopolitical dynamics, finds the report highlighting that China's clashes with countries bordering the South China Sea, India suggest geopolitical risks rising for the entire region," the report said.

The impact of lockdowns on Q2 global activity will be larger than expected earlier, Moody's said.

For full coverage of the India-China border tension, clickhere