New Delhi: Fitch Ratings on Thursday slashed India's economic growth projections to 0.8 per cent in the current 2020-21 fiscal saying an unparalleled global recession was underway due to disruptions caused by the outbreak of coronavirus pandemic and resultant lockdowns.
In its Global Economic Outlook, Fitch Ratings said India's gross domestic product (GDP) growth will slip to 0.8 per cent for the year April 2020 to March 2021 (FY21) as compared to an estimated 4.9 per cent growth in the previous fiscal.
Growth is, however, expected to rebound to 6.7 per cent in 2021-22.
The rating agency predicted two consecutive quarters of contraction or negative year-on-year growth in current fiscal (-)0.2 per cent in April-June and (-)0.1 per cent in July-September. This compares to 4.4 per cent estimated growth in January-March.
Growth is expected to rebound to 1.4 per cent in the last quarter of 2020 calendar year.
Fitch said the slump in FY21 growth was mainly due to a projected fall in consumer spending to just 0.3 per cent in FY21 from 5.5 per cent a year back and a 3.5 per cent contraction in fixed investment.
The agency has further made large cuts to global GDP forecasts in its latest Global Economic Outlook (GEO) in response to coronavirus-related lockdown extensions and incoming data flows.
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"World GDP is now expected to fall by 3.9 per cent in 2020, a recession of unprecedented depth in the post-war period," said Brian Coulton, Chief Economist at Fitch Ratings.
This would be twice as severe as the 2009 recession.
The decline in GDP equates to a USD 2.8 trillion fall in global income levels relative to 2019 and a loss of USD 4.5 trillion relative to pre-virus expectations of 2020 global GDP.
"No country or region has been spared from the devastating economic impact of the global pandemic," the rating agency said.
A notable feature of this update is sharp further downward revisions to GDP forecasts for emerging markets (EM).
Falling commodity prices, capital outflows and more-limited policy flexibility are exacerbating the impact of domestic virus-containment measures; Mexico, Brazil, Russia, South Africa and Turkey have all seen big GDP forecast adjustments.
India's GDP growth likely to range up to 1.5 pc in FY21: CII
India's GDP is likely to range between a decline of 0.9 per cent and a growth of 1.5 per cent in the current financial year, with the economy undergoing a "turbulent" phase caused by the coronavirus-induced lockdown, according to a report.
The Confederation of Indian Industry (CII) in a paper - A plan for economic recovery, has laid out its growth expectation under three os and suggested "urgent" fiscal interventions.
In the baseline scenario, the Gross Domestic Product (GDP) is expected to grow at just 0.6 per cent on an annual basis as economic activity is expected to remain constrained due to continuing restrictions on the free movement of goods and people beyond the lockdown period.
This will lead to disruption in supply chains, slow pick-up in investment activity, labour shortages in the short-run and muted consumption demand on account of reduced household incomes, the industry body said.
In the optimistic scenario, which envisages a faster pick-up post the lockdown period, the GDP is forecast to register a growth of 1.5 per cent in the best case.
(PTI Report)
