Fitch Solutions has revised downward its forecast for fuel demand contraction in India to 11.5 per cent in 2020 in line with further deterioration in the country’s economic outlook.
Its economists forecast India’s real GDP to contract by 8.6 per cent in the fiscal year 2020-21 (April 2020 to March 2021), down from -4.5 per cent previously.
“Demand weakness is spread across the board, with both consumer and industrial fuels set for the steep decline,” Fitch Solutions said in a note. “We have made a further downward revision to our India refined fuels demand forecast for 2020, from -9.4 per cent to -11.5 per cent, in line with further deterioration in the country’s economic outlook.”
It forecast a 5 per cent year-on-year (y-o-y) growth in 2021 and 2022, as the outbreak is brought under control and the economic activity normalises.
In the first quarter of 2020-21, the GDP shrank by 23.9 per cent, the steepest contraction on record.
The domestic COVID-19 outbreak shows no signs of abating, with daily cases continuing to accelerate.
“While the nationwide lockdown (in place since March 25) was lifted on May 31, state-level restrictions remain in place and will likely drag on the economic recovery,” it said.
