Credit ratings major Fitch said on Monday that it expects India's gross domestic product (GDP) to shrink 10.5 per cent in the current financial year, revising its previous projection of 5 per cent. The downward revision in its forecast on India comes days after official data showed the country's GDP contracted a record 23.9 per cent in the quarter ended June 30, as restrictions to curb the spread of COVID-19 severely impacted consumer spending, private investments and exports.
The government expects the country's economy to register a "V-shaped" recovery, with an improvement in performance in the coming quarters, as indicated by a pickup in rail freight, power consumption and tax collections.
Many economists say India - the world's fastest-growing large economy until a few years ago - is headed for its first full-year contraction since 1980.
While Fitch lowered its projection for India, it raised its projection for global GDP to -4.4 per cent in 2020, from -4.6 per cent previously, saying the recovery in economic activity after the COVID-19-related recession has been "swifter than anticipated".
However, the pace of expansion is expected to moderate soon, Fitch said in its Global Economic Outlook report.
Fitch now expects the United States, the world's largest economy, to shrink 4.6 per cent this year. In June, the ratings agency had estimated the contraction at 5.6 per cent.
It expects China's economy to grow 2.7 per cent in 2020, in a shift from its previous projection of 1.2 per cent.
GDP in emerging markets excluding China is expected to contract 5.7 per cent now, as against 4.7 per cent previously, according to Fitch.