The Fitch credit rating institute has continued reducing the global GDP growth rate forecast in the latest global economic prospects report, however, Fitch believes that the drop in the global economic activities is reaching the bottom.
Chief economist at Fitch Ratings, Brian Coulton, predicted: "World GDP is forecasted to decline by 4.6% in 2020 instead of by 3.9% according to our latest forecast. "The deep global economic downturn is directly attributable to the decline in the economic performance of the eurozone and the UK as well as emerging countries (excluding China)."
Fitch forecasts that the Eurozone economy will grow by 8.2% compared to the negative rate of 7% in the previous forecast. The recently-published economic depression statistics reflect the fact that the economic activity in France, Italy, and Spain in the context that the blockade measures have been applied have declined more than originally anticipated.
Fitch forecasts that the Spanish economy will grow by 9.6%; Italy's economy will grow by 8.0%, and France's economy will grow by 7%. The blockade in the UK is also likely to last longer than initially anticipated, Britain's GDP may grow by negative 7.8% this year (much lower than the negative 6.3% according to previous calculations ".
Fitch said that emerging economies excluding China will grow by negative 4.5% this year, instead of by the negative 1.9% level in the previous calculations. The declining GDP forecast is caused by the worsening "health" of many large emerging economies including Brazil, India, and Russia. Fitch forecasts that India's GDP will grow by 5% in the current fiscal year (ending March 2021). The COVID-19 infection rate in Brazil and Russia from mid-April 2020 until now has increased rapidly, and the GDP of Brazil and Russia can therefore respectively grow by negative 6% and negative 5%.
Fitch calculates the GDP growth of China, the US, and Japan remains unchanged from the previous forecast. Specifically, China's GDP has grown by 0.7%; the US GDP has had negative growth of 5.6% and the Japanese GDP has had negative growth of 5%.
Fitch points to evidence that global economic activity may be near the bottom. The recently published indexes of May 2020 show that the situation has improved compared to April 2020, and the number of visitors to retail stores and entertainment centers in the eurozone and the US has increased gradually since the blockade regulations were relaxed in late April and early May.
What happened in China recently shows that economic activity will rebound after the blockade regulations are relaxed. Industrial production is now back to the level in December 2019, and investment in fixed assets and credit growth is improving.