Fitch ratings the international agencies forecast for India to 5.1 per cent from 5.6 per cent for 2020-21 as Covid-19 hits sentiment and supply chain disruptions in China impact input-dependent Indian manufacturers. Standard and Poor (S&P) had slashed its 2020 growth projection for India to 5.2 per cent from 5.7 per cent as it fears that the Asia Pacific region may slide into recession as countries implement strict lock-downs to contain the -19 pandemic. Moody’s and Organisation for Economic Cooperation and Development (OECD) have recently cut their 2020 growth projections for India to 5.3 per cent and 5.1 per cent respectively.
Fitch said although the number of confirmed COVID-19 cases in India was low, given the size of its population, it was picking up. This scenario assumes the number of people affected will keep rising in the coming weeks but that the outbreak will remain contained.
The rating agency said the downside risks to this scenario include the impact of the outbreak on consumer and business sentiment, as local governments have rolled out measures to contain the spread of the virus, such as closing schools, cinemas and theatres. ‘While India’s linkages with China (e.g. trade and tourism) are modest, manufacturers in India are heavily reliant on key Chinese intermediate inputs, especially of electronics (60%) and machinery and equipment (47%). Supply-chain disruptions are expected to hit business investment and exports,’ it added.
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