"The global economic picture is looking bleak, with recessions in almost every developed economy across the world. We assume that there will be a recovery in the second half of the year," said Agathe Demarais, Global Forecasting Director, EIU.
Even as the Indian economy is likely to be battered by the Coronavirus pandemic this year, it is still likely to be better off than all other G20 countries. The Economist Intelligence Unit (EIU) in its post-Covid-19-outbreak revised growth forecast for G20 countries in 2020 downgraded projected FY21 GDP growth of India to 2.1 per cent from 6 per cent before the outbreak. While this looked like a free fall but when compared to other G20 countries, India’s growth projection stood on the top while others are set to dive deep into recession except for two other countries – China and Indonesia.
While India will be the fastest-growing this year at 2.1 per cent, China and Indonesia will grow at 1 per cent in 2020, EIU forecast said. “The global economic picture is looking bleak, with recessions in almost every developed economy across the world. We assume that there will be a recovery in the second half of the year, but downside risks to this baseline scenario are extremely high, as the emergence of second, or third waves of the epidemic would sink growth further,” said Agathe Demarais, Global Forecasting Director, EIU in the forecast update on its website.
The biggest contraction in the GDP growth this year among the rest 17 of the G20 countries would be suffered by Italy (-7 per cent), Germany (-6.8 per cent) and Argentina (-6.7 per cent) followed by Brazil (-5.5 per cent), Mexico (-5.4 per cent), France (-5 per cent), Saudi Arabia (-5 per cent), and UK (-5 per cent). The US economy would contract to -2.2 per cent in 2020. Demarais said the uncertainty will remain high since it is “hard to see an exit strategy from the lockdowns.” Moreover, many countries will be staring at a debt crisis due to the “combination of lower fiscal revenues, and higher public spending,” he said.
Rating agencies have also cut India’s growth forecast in their projections. While Moody’s Investor Service cut the forecast from 5.3 per cent to 2.5 per cent for 2020, Fitch Ratings had slashed the growth from 5.6 per cent to 5.1 per cent for FY21, PTI reported. On the other hand, UBS Securities expected the GDP to grow by 4 per cent in FY21 down from 5.1 per cent forecast.