Predicting private consumption is likely to contract due to large-scale loss of income in the face of worsening domestic outbreak of COVID-19, Fitch Solutions in its latest report cut India's gross domestic product (GDP) growth forecast to 1.8 per cent for the financial year 2020-21 (FY21) from 4.6 per cent, previously.
The agency is also expecting a deeper contraction in fixed investments as businesses choose to cut back on capital expenditure to conserve cash amid elevated economic uncertainty. It further added that the slow roll-out of fiscal stimulus by the central government will only exacerbate India's economic woes.
Besides, Fitch Solutions revised downwards China’s 2020 real GDP forecast to 1.1 per cent from 2.6 per cent previously, to reflect the impact of a worsening global economic outlook. It also said ‘Real GDP (of China) contracted by a sharp 6.8 per cent y-o-y in Q1 2020, and current forecast reflects view that private consumption and net exports will continue to drag heavily.’