Fitch: Indian GDP to contract 10.5%

New Delhi, September 8

India’s economy is expected to contract 10.5 per cent in the current fiscal before bouncing back in the next financial year, Fitch Ratings said today.

India’s gross domestic product (GDP) contracted by a massive 23.9 per cent in April-June and some agencies have predicted negative growth even during the July-September quarter of the current fiscal (April 2020 to March 2021).

“The GDP should rebound strongly in third quarter (October-December) amid a re-opening of the economy, but there are signs that the recovery has been sluggish and uneven,” Fitch said in its Global Economic Outlook (GEO). It slashed its GDP forecast for the current fiscal to 10.5 per cent, a huge revision of (-) 5 percentage points compared to the June GEO.

The economy, it said, would recover to 11 per cent in 2021-22, largely owing to base effect and grow by 6 per cent in the following year.

Separately, India Ratings and Research, the domestic arm of rating agency Fitch, projected an 11.8 per cent contraction in the Indian economy in FY21, as against its previous projection of 5.3 per cent contraction in the current fiscal. Indian economy had grown at 4.2 per cent in the 2019-20 fiscal.

According to India Ratings, the GDP would bounce back to 9.9 per cent growth in FY22, helped mainly by a weak base of FY21.

In another report, Morgan Stanley projected a contraction of 5 per cent in the Indian economy in the calendar year 2020 from 4.9 per cent in 2019. — PTI

Global Outlook

• Fitch Ratings on Tuesday projected global GDP to contract 4.4 per cent in the current financial year
• Fitch cut its 2020 GDP forecast for emerging markets, excluding China, to (-) 5.7 per cent, from (-) 4.7 per cent estimated in June
• It projected the US GDP to contract 4.6 per cent in 2020, less than the 5.6 per cent decline expected in its June Global Economic Outlook