New Delhi | Jagran Business Desk: American credit rating agency Fitch Ratings on Tuesday revised India’s gross domestic product (GDP) outlook for Financial Year 2020-21 and projected a massive 10.5 per cent contraction of India's economy. Earlier the Fitch Ratings had estimated that India’s economy will shrink by 5 per cent during the current financial year.

"We have slashed our GDP forecast for this fiscal year to (-) 10.5 per cent, a huge revision of (-) 5pp compared to the June Global Economic Outlook (GEO)," it said as reported by news agency PTI.

However, the Fitch Ratings has said that India’s GDP should rebound strongly in the third quarter (October-December) of FY 2020-21 with the reopening of the economy.

"GDP should rebound strongly in 3Q20 (October-December) amid a re-opening of the economy, but there are signs that the recovery has been sluggish and uneven," Fitch said, as reported by PTI.

The official GDP data released by the Indian government last month showed a drop of 23.9 per cent in the Gross Domestic Product (GDP) in the April-June quarter of the current financial year (FY 2020-21) amid the imposition of one of the most stringent global nationwide lockdown.

"The GDP at constant (2011-12) prices in Q1 of 2020-21 is estimated at Rs 26.9 lakh crore as against Rs 35.35 lakh crore in Q1 of 2019-20, showing a contraction of 23.9 per cent as compared to 5.2 per cent growth in Q1 2019-20," said the Ministry of Statistics and Programme Implementation in a statement.

Meanwhile, the Fitch Ratings also forecasts global GDP to contract 4.4 per cent in 2020, a slight upward revision from the earlier projection of -4.6 per cent.

"Official data have now revealed the extent of the economic dislocation in 2Q20 with world GDP falling by 8.9 per cent YoY and many countries seeing falls in the output of a fifth or more," Fitch said in a statement.

"The UK, India, France, Italy and Spain stand out, having experienced stringent and/or lengthy lockdowns in 2Q20 which saw mobility (visits to retail and recreation venues) levels fall very sharply and 2Q20 GDP surprise on the downside compared with our June GEO estimates," Fitch added.

Posted By: Talib Khan