Fitch in its report titled, ‘India Set for Slow Medium-Term Recovery’ has projected that India’s Gross Domestic Product (GDP) will expand by 11% in 2021-22 in contrary to the down gradation by 9.4%(-9.4%) in the FY21 fiscal (April 2020 – March 2021).
- Though the expansion is there, the level of GDP remain well below its pre-pandemic scenario. This is due to the decrease in GDP growth more than ten-year low of 4.2% in 2019.
- Fitch also projected that the medium-term recovery will be slowdown to 6.5% from FY23-FY26.
Key Points with respect to India:
–The rollout of COVID-19 vaccines is supporting the recovery phase of India.
–The agency downgraded its projection of supply-side potential growth to 5.1% annually over the five-year period from 2020-25 as compared to its pre-pandemic expectation of 7%.
–GDP in April-June (Q1FY21) was 23.9% below its 2019 level. Further 7.5% decline in GDP in Q2FY21 pushed India into an unprecedented recession.
–Fitch puts FY23-26 growth at 6.5%.
Nomura Estimates India’s GDP to contract 6.7% in FY21
The Japanese brokerage Nomura has upgraded the GDP forecast for India in 2020-21 to -6.7% from earlier -7.7%. It further projected the GDP of India to rise to 13.5% in FY22.
- There will be strong recovery in Q4FY21.
Recent Related News:
i.On December 8, 2020, Fitch Ratings in its recent Global Economic Outlook-December 2020 upgraded the India’s Gross Domestic Product (GDP) forecast to – 9.4% in FY21 from a previously projected contraction of 10.5%(-10.5%).
ii.The ‘Asian Development Bank(ADB)’s ‘Asian Development Outlook (ADO) 2020 Supplement: Paths Diverge in Recovery from the Pandemic’- December 2020, has revised India’s Gross Domestic Product (GDP) FY21 rate upwards to -8%(contract by 8) from -9% projected in Asian Development Outlook 2020 Update in September 2020.
About Fitch Ratings:
President– Ian Linnell
Headquarter– New York, United States