Fitch Cuts India’s Growth Forecast to 5.1% For 2020 Due to Coronavirus Outbreak
Fitch Solutions on Friday cut its forecast for India’s growth to 5.1 percent from 5.6 percent due to coronavirus outbreak. The rating agency had in December 2019 projected India's growth at 5.6 per cent for 2020-21 and 6.5 per cent in the following year.
New Delhi, March 20: Fitch Solutions on Friday cut its forecast for India’s growth to 5.1 percent from 5.6 percent due to coronavirus outbreak. The rating agency had in December 2019 projected India's growth at 5.6 per cent for 2020-21 and 6.5 per cent in the following year. Fitch also halved the global growth forecast for 2020 to 1.3 percent. The agency aspects global GDP to be $850bn lower this year, compared to its December forecasts. Coronavirus Impact on Indian Economy: GDP to Decline by Atleast 70-80 BPS, COVID-19 Playing Adverse Effect on Stocks, Says JPMorgan.
In its Global Economic Outlook 2020, the agency said the number of people affected by COVID-19 will keep rising in the coming weeks but that the outbreak will remain contained. However, there are downside risks to this scenario. "Supply-chain disruptions are expected to hit business investment and exports. We see GDP growth to remain broadly steady at 5.1 per cent in the fiscal year 2020-2021 following growth of 5.0 per cent in 2019-2020," Fitch said Coronavirus Impact on Economy: Government May Announce Relief in Tax Payments For Small And Medium Businesses, Says Report.
For 2021-22, Fitch projected India’s growth to be 6.4 per cent. "The outbreak of the virus is hitting sentiment, while local governments have rolled out measures to contain the spread of the virus, such as closing schools, cinemas and theatres. While India’s linkages with China (e.g. trade and tourism) are modest, manufacturers in India are heavily reliant on key Chinese intermediate inputs – especially of electronics and machinery and equipment," Fitch said.
The World Health Organization has declared coronavirus "pandemic." The deadly virus has invected more than two lakh people worldwide and claimed over 9,000 lives. In India, there are about 195 positive cases. The difficulties facing the Indian economy have been exacerbated by Yes Bank failure, it said.
"Fragilities in the financial system will further undermine sentiment and domestic spending. The overall financial system remains burdened with weak balance sheets, which will limit any upside to credit and growth despite policymakers' efforts in recent months to ease stresses,” Fitch added.
(With PTI Inputs)
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