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Fitch raises FY21 GDP forecast to (-) 9.4%
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SME Times News Bureau | 08 Dec, 2020
Global credit rating agency Fitch on Tuesday raised its FY21 GDP growth
forecast for India by predicting a narrower economic contraction of (-)
9.4 per cent from an earlier predicted fall of (-) 10.5 per cent.
"We
now expect GDP to contract 9.4 per cent in fiscal year to end March
2021, followed by (+) 11 per cent and (+) 6.3 per cent in the following
years," Fitch Ratings said in its latest Global Economic Outlook (GEO)
for December.
"The coronavirus recession has nevertheless
inflicted severe economic scarring. The need to repair balance sheets,
increased caution about long-term planning, and firm closures will limit
investment demand."
Furthermore, it pointed out that increased
financial-sector weakness - amid deteriorating asset quality - will hold
back credit provision.
"The failure of another bank in recent
weeks - the third failure in the past 16 months - underlines the
challenges in the financial sector," the December GEO said.
Recently, India recorded a faster than anticipated economic recovery.
The
country's GDP contracted 7.5 per cent in the July-September period, as
the economy rebounded from a record slump of 23.9 per cent in the
previous quarter due to slowdown caused by the coronavirus pandemic.
"The
Indian economy staged a sharper rebound in 3Q20 from the
coronavirus-induced recession than we expected in our September GEO. GDP
fell 7.5 per cent yoy (September GEO: (-) 9.6 per cent), up from (-)
23.9 per cent in 2Q20."
"The rebound in activity was especially
sharp in the manufacturing sector: output reached its pre-pandemic level
in 3Q20, and the manufacturing PMI hints at further gains.
Manufacturing is buoyed by strong demand for autos and pharmaceutical
products, in particular."
According to the rating agency, the
rebound in the services sector was more muted amid continued social
distancing, with containment measures scaled back only gradually.
"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."
However,
it pointed out the likelihood that the vaccine rollout over the next 12
months will not reach the majority of the people given the huge
logistical and distribution challenges in a heavily populated country
like India.
"Regional shutdowns are likely in the next few months while the virus is still spreading."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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