NEW DELHI: Fitch Solutions on Monday cut India's economic growth forecast for the financial year 2020-21 to 1.8 per cent saying private consumption is likely to contract due to large-scale loss of income in the face of worsening domestic outbreak of COVID-19.
"Over the past week, we have continued to adjust down our country-specific real GDP growth forecasts on the back of persistent low oil prices and the widening spread of COVID-19. Our forecasts remain fluid and, even despite the recent downward revisions, we believe that the risks remain skewed to the downside," the rating agency said.
For India, it said the real GDP growth rate for 2020-21 (April 2020 to March 2021) has been revised down to 1.8 per cent from 4.6 per cent, previously.
"We now expect private consumption to contract, versus a weak expansion previously, due to large scale loss of income across the economy in the face of a worsening domestic outbreak of COVID-19," it said.
Fitch Solutions also anticipated a deeper contraction in fixed investments as businesses choose to cut back on capital expenditure to conserve cash amid elevated economic uncertainty.
"The slow roll-out of fiscal stimulus by the central government will only exacerbate India's economic woes," it added.
For China, it revised downwards its 2020 real GDP forecast to 1.1 per cent from 2.6 per cent previously, to reflect the impact of a worsening global economic outlook.
"Real GDP (of China) contracted by a sharp 6.8 per cent y-o-y in Q1 2020, and our current forecast reflects our view that private consumption and net exports will continue to drag heavily," it said.
"Meanwhile, targeted fiscal stimulus should see fixed investment growth come in relatively flat, while strong government consumption will provide the bulk of support and prevent a full-year contraction in 2020."