Fitch Ratings recently cut India's growth forecast for fiscal 2021-22 to 8 per cent from 9.5 per cent projected in June. However, the rating agency retained its projection of Indian economy contracting by 5 per cent this fiscal, mainly due to a 8.3 per cent and 12.4 per cent contraction in consumer spending and fixed investment respectively.

Indian economic growth stood at an estimated 4.2 per cent in 2019-20. In its June update of Global Economic Outlook, Fitch projected Indian economy would grow by 5.5 per cent in fiscal 2022-23. In its May update to the outlook, it had projected 9.5 per cent growth in 2021-22.

It predicted growth to contract by 13.8 per cent in the July-September quarter as against 0.3 per cent in the April-June quarter.

With regard to China, Fitch Ratings said its recovery also continued at a solid pace in May and raised 2020 gross domestic product (GDP) forecast to 1.2 per cent, from 0.7 per cent in the previous outlook.

Fitch projected global GDP to fall by 4.6 per cent in 2020, same as that projected in May update of the outlook. It expects global GDP to rise by 4.9 per cent in 2021, a rebound that is partly technical as the restrictions on activity imposed in 2020 are eased, according to a news agency report.

"Signs of sequential improvements in activity have become clearer over the past month, lending confidence to the view that April marked the trough of the coronavirus-related recession....Nevertheless, the risk of a resurgence of the virus and renewed nationwide lockdowns - which could severely interrupt the expected economic recovery path - remains high," Fitch Ratings chief economist Brian Coulton said.

World growth is expected to continue at an above-trend rate of 3.4 per cent in 2022 as the impact of policy support persists and the output gap closes, although the rating agency anticipates some loss of potential GDP in the aftermath of the crisis.

Fibre2Fashion News Desk (DS)

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