InvestorQ : Why are big names like Fitch downgrading India’s growth for next year so sharply?
swati Bakhda made post

Why are big names like Fitch downgrading India’s growth for next year so sharply?

Answer
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Sam Eswaran answered.
3 weeks ago


Here is what you need to know about the Fitch decision to downgrade India’s GDP growth in real terms for the fiscal year 2021..

· Fitch has estimated that the world economy will contract by (-4.4%) in 2020. This is likely to be driven by the US, EU and most of Asia other than China

· Fitch expects the Chinese economy to show positive growth of 2.7% in CY2020 helped by a sharp recovery in the September and December quarters

· However, Fitch emphasizes that the emerging markets; ex-China has will grow lower by 100 bps at -5.7%, due to the negative impact of the Indian economy

· Fitch now expects the Indian to contract by -10.5% in FY21, as compared to the original estimate of -5.5%. This is a very sharp downgrade and sharpest by any agency

· According to Fitch, India was unnecessarily too stringent in executing the lockdown and at the same time did not have the resources to give a fiscal boost

· Fitch estimates GDP growth to pick up to a positive 9.9% in FY22 but that would be on a substantially lower base and by end of FY22, Indian GDP will still be lower than FY19

· Fitch has actually upgraded China growth in CY2020 from 1.2% to 2.7% anticipating a rapid recovery in investments. China is likely to export its way out of trouble.

Clearly, as per Fitch, India is likely to lead the world growth lower.