Fitch Ratings revises India's GDP forecast to (-)9.4% for the current financial year, compared to a contraction of 10.5% which was projected previously. The rating agency in its Global Economic Outlook - December 2020, said that the Covid-19 recession has inflicted severe economic scarring and the country needs to repair balance sheets and increase caution about long-term planning.
Further, Fitch kept India's GDP forecast at 11% (unchanged) and 6.3% (0.3percentage points) for the following years.
India's GDP at the constant price in Q2FY21 is estimated at Rs33.14 lakh cr against Rs35.84 lakh cr compared to the same period of last year. In percentage terms, GDP stood at a contraction of 7.5% in Q2FY21 against the growth of 4.4% in Q2FY20. In the June 2020 quarter, the GDP contracted to 23.4%.
Talking about the global economy, Fitch said, with the second wave of the virus prompting renewed national lockdowns in Europe and tighter restrictions in the US. This will compress economic activity in the immediate months ahead, albeit by much less than in April.
Fitch adds, but a vaccine rollout now looks imminent and raises the prospect of a significant easing in the global health crisis by the middle of 2021 and a more sure-footed economic recovery thereafter. The rebound in economic activity in 3Q20 after lockdowns was eased was much faster than anticipated in nearly all Fitch 20 economies, particularly in Europe.
The rating agency also said, unfortunately, this impressive initial progress towards economic normalisation has not lasted and Fitch Ratings now anticipates a double-dip recession in Europe in 4Q20. This highlights the importance of containing the virus for a fully-fledged recovery, as underscored by China’s impressive rebound.
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