The International Monetary Fund (IMF) on Wednesday, 24 June, predicted a sharp contraction of 4.5 percent for the Indian economy in 2020, however, it added that India is expected to bounce back in 2021 with a 6 percent growth rate.
Global growth, too, is projected to be at -4.9 percent in 2020, 1.9 percentage points below the April forecast, followed by a partial recovery, with growth at 5.4 percent in 2021.
Indian-American Gita Gopinath, IMF’s Chief Economist, wrote, “The COVID-19 pandemic pushed economies into a Great Lockdown, which helped contain the virus and save lives, but also triggered the worst recession since the Great Depression.”
"We are now projecting a deeper recession in 2020 and a slower recovery in 2021," Gopinath added.
Calling the contraction a "historic low", she added, “We are projecting a synchronised deep downturn in 2020 for both advanced economies (-8 percent) and emerging market and developing economies (-3 percent; -5 percent if excluding China), and over 95 percent of countries are projected to have negative per capita income growth in 2020.”
The 2020 projection for India is a massive -6.4 percent less than the April forecast of the IMF, PTI reported. The projected growth rate of 6 percent in 2021 is -1.4 percent less than its April forecast.
“On the upside, better news on vaccines and treatments, and additional policy support can lead to a quicker resumption of economic activity. On the downside, further waves of infections can reverse increased mobility and spending, and rapidly tighten financial conditions, triggering debt distress.”Gita Gopinath, IMF’s Chief Economist
