Global GDP forecast revised up modestly: Fitch Ratings

Fitch Ratings in its latest Global Economic Outlook (GEO) released Monday expects global GDP to fall by 4.4% in 2020, a modest upward revision from the 4.6% decline expected in the June GEO. Report informs citing the Fitch Ratings. The recovery in economic activity after the unprecedented severe coronavirus-related recession in March and April has been swifter than anticipated, but we expect the pace of expansion to moderate soon.

"China has already regained its pre-virus level of GDP and retail sales in the US, France and the UK now exceed February levels, but we doubt this will become the much-lauded 'V'-shaped recovery. Unemployment shocks lie ahead in Europe, firms are cutting capex, and social distancing continues to directly constrain private-sector spending", said Brian Coulton, Chief Economist, Fitch Ratings.

We now expect the US economy to contract by 4.6% this year compared to a fall of 5.6% in the June GEO. Our 2020 China growth forecast is +2.7% (this was revised in late-July at the time of our most recent China sovereign rating review) compared to +1.2% in the June GEO. These revisions have been partly offset by cuts to our 2020 GDP forecasts for the eurozone to -9.0% (-8.0%), the UK to -11.5% (-9.0%) and for emerging markets (EM) excluding China to -5.7% (-4.7%). The latter primarily reflects a huge change in our India forecast for the fiscal year-ending March 2021 (FY21) to -10.5% from -5.0%.

Official data have now revealed the extent of the economic dislocation in 2Q20 with world GDP falling by 8.9% yoy and many countries seeing falls in output of a fifth or more. The UK, India, France, Italy and Spain stand out, having experienced stringent and/or lengthy lockdowns in 2Q20 which saw mobility (visits to retail and recreation venues) levels fall very sharply and 2Q20 GDP surprise on the downside compared with our June GEO estimates.