Moody’s said while there were indications that the country's monetary policy direction was tightening, the trade tensions and geopolitical risk had injected additional uncertainty, making long-term spending and investment decisions difficult. It said it only expected the country's economy to grow 1.2percent in 2021.
Moody’s also revised other emerging markets such as Argentina and Saudi Arabia downwards.
“With export growth likely to remain subdued, emerging market countries will become increasingly reliant on domestic demand to facilitate continuing economic growth,” it said.
“On the positive side, low energy prices, low inflation, and loose monetary policy will benefit emerging markets, provided that the monetary policy stance in advanced economies also remains supportive.”