American credit rating agency Fitch Ratings on Thursday cut India’s growth projections to 0.8 per cent in the current 2020-21 fiscal saying, an unparalleled global recession was underway due to disruptions caused by the outbreak of coronavirus pandemic and resultant lockdowns. This is the third update of Fitch Ratings’ Global Economic Outlook forecast in a month. In a normal scenario, these ratings are given on a quarterly basis.

The agency said that India’s gross domestic product (GDP) growth will slip to 0.8 per cent for the year April 2020 to March 2021 (FY21), a revision from the 2 per cent that was projected some time ago, as compared to an estimated 4.9 per cent growth in the previous fiscal. But the growth is expected to rebound to 6.7 per cent in 2021-22.

“With China and India both now expected to see sub-1 per cent growth, we expect an outright contraction in EM GDP in 2020, a development unprecedented since at least the 1980s,” it said.

A notable feature of this update is sharp further downward revisions to GDP forecasts for emerging markets (EM).

“Falling commodity prices, capital outflows and more-limited policy flexibility are exacerbating the impact of domestic virus-containment measures; Mexico, Brazil, Russia, South Africa and Turkey have all seen big GDP forecast adjustments.”

The agency has further made large cuts to global GDP forecasts in its latest Global Economic Outlook (GEO) in response to coronavirus-related lockdown extensions and incoming data flows.

“World GDP is now expected to fall by 3.9 per cent in 2020, a recession of unprecedented depth in the post-war period,” said Brian Coulton, Chief Economist at Fitch Ratings.

This would be twice as severe as the 2009 recession.

The decline in GDP equates to a USD 2.8 trillion fall in global income levels relative to 2019 and a loss of USD 4.5 trillion relative to pre-virus expectations of 2020 global GDP. “No country or region has been spared from the devastating economic impact of the global pandemic,” the rating agency said.

Earlier in the month, the International Monetary Fund slashed India’s growth projection from 5.8 per cent to 1.9 per cent for the financial year 2020-2021, as the pandemic continues to crush the global economy. It said that India is likely to witness its worst growth performance since liberalisation in 1991. But the agency had also said that only

India and China will see positive growth in 2020.

Several major economies recently have extended lockdown measures. India too has extended the nationwide lockdown that began on March 25 to May 3.