India’s GDP Projected To Fall By 83%; Recession Will Be Twice As Severe As 2009
The COVID-19 pandemic and the resultant lockdowns issued to curb the spread of virus has brought the economies of many countries around the world to their knees.
As per the Fitch Ratings on April 23, India’s economic growth projections will slip by 0.8% in the current 2020-21 fiscal.
Decline in India’s GDP !
In its Global Economic Outlook, Fitch Ratings said India’s Gross Domestic Product (GDP) growth will be slashed by 0.8% for the year April 2020 to March 2021 (FY21) as compared to an estimated 4.9% growth in the previous fiscal. However the growth is expected to rebound to 6.7% in 2021-22.
According to the Fitch Ratings, the disruptions caused by the outbreak of coronavirus pandemic and resultant lockdowns are bound to bring about unprecedented global recession.
Fitch has predicted 2 consecutive quarters of contraction or negative year-on-year growth in current fiscal — (-)0.2% in April-June and (-)0.1% in July-September. This is in comparison to the 4.4% estimated growth in January-March. In the Q4 of 2020 calendar year, the growth is expected to rebound to 1.4% .
The rating agency said the the plunge in FY21 growth was mainly due to a projected fall in consumer spending to just 0.3% in FY21 from 5.5% a year back and a 3.5% contraction in fixed investment. The agency has further made large cuts to global GDP forecasts in its latest Global Economic Outlook (GEO) in response to coronavirus-related lockdown extensions and incoming data flows.
The Post-Pandemic Forecast!
Brian Coulton, Chief Economist at Fitch Ratings said, “World GDP is now expected to fall by 3.9% in 2020, a recession of unprecedented depth in the post-war period.”
This is expected to 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.
The Rating agency said, “No country or region has been spared from the devastating economic impact of the global pandemic.” 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 worsening the impact of domestic virus-containment measures; Mexico, Brazil, Russia, South Africa and Turkey have all seen big GDP forecast adjustments.
It said, “With China and India both now expected to see sub-1% growth, we expect an outright contraction in EM GDP in 2020, a development unprecedented since at least the 1980s. We expect supply responses and a relaxation of lockdowns to help oil prices to recover in 2H20 from current lows, which are being exacerbated by storage capacity issues in the US and elsewhere.”
Several major economies recently have extended lockdown measures. India too has extended the nationwide lockdown that began on March 25 to May 3.