The rating agency also said that global economic recovery will strengthen and become more sure-footed.
Fitch Ratings on Tuesday raised India’s GDP forecast to -9.4 per cent in the current fiscal year to March 2021 from a previously projected contraction of 10.5 per cent due to a sharp economic rebound in the July-September quarter.
“We now expect GDP to contract 9.4 per cent in the fiscal year to end March 2021 (FY21) (+1.1 percentage point), followed by +11 per cent growth (unchanged) and +6.3 per cent growth (+0.3pp) in the following years,” the rating agency said in its Global Economic Outlook. The GDP had grown 4.2 per cent in FY 2019-20 (April 2019 to March 2020).
In September, Fitch had sharply lowered its forecast for India’s gross domestic product (GDP) to a contraction of 10.5 per cent in current fiscal 2020-21 (FY21) as against its previous estimate of a 5 per cent contraction.
“The rebound in activity was especially sharp in the manufacturing sector as output reached its pre-pandemic level in Q2, and the manufacturing PMI hints at further gains,” the report said. The strong demand for autos and pharmaceutical products aided the rebound in manufacturing space, the report added. The rebound in services sector was however muted, the report pointed out, amid continuing social distancing and a very gradual roll-back in containment measures in the Covid hotspots.
“The outlook is brighter owing to an expected rollout of various vaccines in 2021. India has pre-ordered 1.6 billion doses including 500 million doses of the Oxford/AstraZeneca vaccine. Distribution should allow a faster-than-expected easing of social-distancing restrictions and boost sentiment,” the rating agency said.
Meanwhile, Fitch Ratings said the global economic recovery will strengthen and become more sure-footed from the middle of next year due to the roll-out of coronavirus vaccines. It expects the world GDP to decline 3.7 per cent in 2020.