Fitch Ratings on Thursday slashed India's economic growth projections to 0.8 percent 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.

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In its Global Economic Outlook, Fitch Ratings said India's gross domestic product (GDP) growth will slip to 0.8 per cent for the year April 2020 to March 2021 (FY21) as compared to an estimated 4.9 percent growth in the previous fiscal.

Growth is, however, expected to rebound to 6.7 percent in 2021-22.

The rating agency predicted two consecutive quarters of contraction or negative year-on-year growth in current fiscal -- (-)0.2 percent in April-June and (-)0.1 percent in July-September. This compares to 4.4 per cent estimated growth in January-March.

Growth is expected to rebound to 1.4 percent in the last quarter of 2020 calendar year.

Fitch said the slump in FY21 growth was mainly due to a projected fall in consumer spending to just 0.3 per cent in FY21 from 5.5 percent a year back and a 3.5 percent contraction in fixed investment.

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 percent 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.

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.

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

"We expect supply responses and a relaxation of lockdowns to help oil prices to recover in 2H20 from current lows, which are being exacerbated by storage capacity issues in the US and elsewhere."

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

First Published:Apr 23, 2020 10:30 AM IST