Economic Update: Fitch Ratings cuts GDP forecasts again – McKinsey see opportunities for a greener recovery

27 May 2020 (Last Updated May 27th, 2020 15:23)

27 May

Fitch Ratings has made further cuts to world GDP forecasts in its latest Global Economic Outlook (GEO).

Brian Coulton, Chief Economist, Fitch Ratings, said: “World GDP is now forecast to fall by 4.6% in 2020 compared to a decline of 3.9% predicted in our late-April GEO.

“This reflects downward revisions to the eurozone and the UK and, most significantly, to emerging markets (EM) excluding China.”

Fitch now expects Eurozone GDP to fall by 8.2% in 2020 compared to a contraction of 7.0%, and the UK 7.8% this year.

McKinsey has said that the tragedy of Covid-19 does present an opportunity for a greener recovery.

The consultancy said: “Low-carbon recovery could not only initiate the significant emissions reductions needed to halt climate change but also create more jobs and economic growth than a high-carbon recovery would.

“Our analysis of stimulus options for a European country suggests that mobilizing €75 billion to €150 billion of capital could yield €180 billion to €350 billion of gross value added, generate up to three million new jobs, and enable a carbon-emissions reduction of 15 to 30% by 2030.

Nomura predicted that Covid-19 is to derail Asia’s GDP growth to -0.5% y-o-y in 2020, from 5.3% in 2019. 8 out of 10 economies will contract in 2020 in the region.

The investment bank also said: “We expect China’s GDP growth to remain negative at -0.5% in Q2 and Beijing to roll out a large stimulus package soon.”