In its Global Economic Outlook, Fitch Ratings said India’s gross domestic product (GDP) growth will slip to 0.8 per cent for the FY21 as compared to an estimated 4.9 per cent growth in the previous fiscal.
The Growth is expected to rebound to 6.7 per cent in 2021-22.
The GDP is expected to rebound to 1.4 per cent in the last quarter of 2020 calendar year.
This GDP slump in FY21 was mainly due to a fall in consumer spending to just 0.3 per cent in FY21 from 5.5 per cent a year back and a 3.5 per cent contraction in gross fixed investment.
“World GDP is now expected to fall by 3.9 per cent in 2020, a recession of unprecedented depth in the post-war period,” said Chief Economist at Fitch Ratings. This would be twice as severe as the 2009 recession.
The decline in GDP equates to a USD 2.8 trillion fall in global income levels relative to 2019 and a loss of USD 4.5 trillion relative to pre-virus expectations of 2020 global GDP.
“No country or region has been spared from the devastating economic impact of the global pandemic,” the rating agency said.
A notable feature of this update is sharp further downward revisions to GDP forecasts for emerging markets (EM).
Falling commodity prices, capital outflows and more-limited policy flexibility are exacerbating the impact of domestic virus-containment measures; Mexico, Brazil, Russia, South Africa and Turkey have all seen big GDP forecast adjustments.
“With China and India both now expected to see sub-1 per cent growth, we expect an outright contraction in EM GDP in 2020, a development unprecedented since at least the 1980s,” it said.
Several major economies recently have extended lockdown measures. India too has extended the nationwide lockdown that began on March 25 to May 3.