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    Fitch slashes 2020 global growth forecast to -4.6%; India gets unkindest cut

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    Fitch slashes 2020 global growth forecast to -4.6%; India gets unkindest cut

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    Global ratings and research Fitch Ratings has further lowered its projection for global economic outlook and the biggest forecast cut was handed to India, its latest Global Economic Outlook released on Tuesday showed.

    Global ratings and research Fitch Ratings has further lowered its projection for global economic outlook and the biggest forecast cut was handed to India, its latest Global Economic Outlook (GEO) released on Tuesday showed.
    According to Fitch Ratings, India is now expected to see a 5 percent decline in growth in the current financial year, compared to its earlier forecast of a growth of 0.8 percent.
    "India has had a very stringent lockdown policy that has lasted a lot longer than initially expected and incoming economic activity data have been spectacularly weak,” its latest GEO report said.
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    The world economy is now expected to contract by 4.6 percent compared to a 3.9 percent contraction predicted last month, as per the latest GEO. Fitch said that although the forecast has been lowered further, the slump in global economic activity is close to reaching its trough.
    "World GDP is now forecast to fall by 4.6 percent in 2020 compared to a decline of 3.9 percent predicted in our late-April GEO. This reflects downward revisions to the eurozone and the UK and, most significantly, to emerging markets (EM) excluding China," said Brian Coulton, chief economist, Fitch Ratings.
    It expects global growth at 5 .1 percent for 2021, higher by 0.1 percentage point from its previous forecast. The severity of the labour market shock in the US and elsewhere and ongoing social distancing will weigh heavily on the post-crisis recovery, the report said.
    Fitch expects growth in the Eurozone to fall by 8.2 percent in 2020 compared to a contraction of 7 percent seen earlier, on the back of larger-than-anticipated falls in activity in France, Italy and Spain amid lockdowns that were more stringent than those in some other countries.
    Output in emerging market economies excluding China is also expected to fall by 4.5 percent this year compared to a predicted fall of 1.9 percent before. "This large revision reflects the deterioration in the health crisis in many of the largest EMs over the past month or so, including in Brazil, India and Russia," Fitch said.
    Fitch said forecasts for 2020 GDP growth for China, the US and Japan were left unchanged since late April at 0.7 percent, -5.6 percent and -5.0 percent, respectively.
    "This concurs with other evidence that the collapse in global economic activity may be close to bottoming out” the report stated. A number of early monthly economic indicators for May have improved slightly on their April values and daily mobility data show consumer visits to retail and recreation venues have increased in the eurozone and the US since lockdowns started to be eased in late April/early May, as per Fitch.
    It believes that China's recent experience suggests that activity could rise after lockdowns are eased. The rating agency has predicted that global quantitative easing (QE) will reach $6 trillion in 2020, equivalent to half of the cumulative QE purchases by the Fed, ECB, Bank of England and Bank of Japan combined in 2009-2018.
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