Fitch Ratings has revised India's GDP forecast to minus 9.4 per cent in the current fiscal year from a previously projected contraction of 10.5 per cent after the economy staged a sharper rebound in the second quarter.
In its Global Economic Outlook, Fitch said the coronavirus-induced recession inflicted severe economic scarring and the country needs to repair balance sheets and increase caution about long-term planning.
"We now expect GDP to contract 9.4 per cent in the fiscal year to end March 2021 (plus 1.1 percentage point) followed by plus 11 per cent growth (unchanged) and plus 6.3 per cent growth in the following years," the rating agency said.
Fitch said the Indian economy staged a sharper rebound in the July to September quarter from the COVID-19 led recession. GDP fell 7.5 per cent year-on-year, up from minus 23.9 per cent in the April to June quarter.
At the same time, Fitch said the global economic recovery will strengthen and become more sure-footed from the middle of next year as coronavirus vaccines are rolled out and social distancing starts to unwind.
Fitch now expects world GDP to fall by 3.7 per cent in 2020 compared to 4.4 per cent in the September Global Economic Outlook.
This is despite the expectation of renewed falls in GDP in 4Q 20 in the eurozone and the UK -- following the recent tightening of restrictions -- and reflects the fact that global activity rebounded much more quickly than expected in 3Q 20.
"The global recovery path is proving bumpier than expected as the second wave of the virus prompts new restrictions, but the vaccine news is very positive for the economic outlook over the next two years", said Brian Coulton, Chief Economist at Fitch Ratings.
Fitch has revised up its 2021 global growth forecast to 5.3 per cent (from 5.2 per cent) with stronger growth through 2H 21 partly offset by weakness in the immediate months ahead.
US GDP is now projected to expand by 4.5 per cent (up from 4 per cent) and China by 8 per cent (up from 7.7 per cent) but eurozone growth is now forecast at 4.7 per cent (down from 5.5 per cent) as renewed lockdown measures take their toll on activity over the winter months.
Photograph: Rupak De Chowdhuri/Reuters
