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Fitch forecasts Indian economy to contract 5% in FY21

27 May 2020 Evaluate

Fitch Ratings in its latest Global Economic Outlook (GEO) for May has projected Indian economy to contract 5% in current financial year (FY21) on account of slump in economic activities and very stringent lockdown policy. This is substantially lower than 0.8 percent growth for FY21 projected in April.

It said India has had a very stringent lockdown policy that has lasted a lot longer than initially expected and incoming economic activity data have been spectacularly weak. This compares to an estimated 3.9 percent growth in the previous fiscal. Growth is, however, expected to rebound to 9.5 percent in FY22.

Besides, Fitch said it has made further cuts to world GDP forecasts but the slump in global economic activity is close to reaching its trough. It said ‘World GDP is now forecast to fall by 4.6 percent in 2020 compared to a decline of 3.9 percent predicted in our late-April GEO.’ This reflects downward revisions to the eurozone and the UK and, most significantly, to emerging markets (EM) excluding China.

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