New Delhi, April 20: Fitch Solutions on Monday has cut India’s GDP growth forecast for FY21 to 1.8 per cent from 4.6 per cent earlier due to contraction in private consumption following the novel coronavirus (COVID-19) outbreak.

“We have revised down our forecast for India’s FY20/21 (April-March) real GDP growth to 1.8 per cent, from 4.6 per cent previously. We now expect the private consumption to contract, versus a weak expansion previously, due to large scale loss of income across the economy in the face of a worsening domestic outbreak of COVID-19,” Fitch Solutions said in a statement.

“We now also anticipate a deeper contraction in fixed investments as businesses choose to cut back on capital expenditure to conserve cash amid elevated economic uncertainty. The slow rollout of fiscal stimulus by the central government will only exacerbate India’s economic woes,” it added.

For China, it has revised downwards its 2020 real GDP forecast to 1.1 per cent from 2.6 per cent previously, to reflect the impact of a worsening global economic outlook.

The COVID-19 first broke out in the Chinese city, Wuhan.

Fitch Solutions said: “Real GDP (in China) contracted by a sharp 6.8 per cent y-o-y in Q120, and our current forecast reflects our view that the private consumption and net exports will continue to drag heavily. Meanwhile, the targeted fiscal stimulus should see fixed investment growth come in relatively flat, while strong government consumption will provide the bulk of support and prevent a full-year contraction in 2020.”

Analysing various other global economies, the global rating agency now forecasts real GDP in Russia to contract by 2.4 per cent in 2020, down from our previous forecast of -1.3 per cent.

“With the number of novel coronavirus cases rapidly increasing, President Vladimir Putin has extended emergency measures to curb the spread of the virus, including shop closures and restrictions to mobility, to the entire month of April. This crisis is likely to prove at least as severe as the 2014-16 downturn - triggered by a collapse in oil prices and the imposition of Western sanctions after Moscow’s annexation of Crimea - which saw the GDP in Russia fall to -2.3 per cent in 2015. Having said that, after years of fiscal consolidation and deleveraging, the country is now better placed to avoid a financial crisis and usher in an economic recovery when the immediate impact of the pandemic begins to recede,” it said.