• With the country and world reeling under the impact of the coronavirus pandemic, the Indian economy is expected to grow at -10.3 % ( i.e., a contraction) in 2020 as per the World Economic Outlook Report by International Monetary Fund (IMF).
• The 2020 projection for India is a downgrade of -5.8 percentage points from the IMF’s June projection for the country. India is expected to rebound in 2021 with 8.8 percent growth – an upgrade of 2.8 percentage points relative to the June update.
• “Revisions to the forecast are particularly large for India, where GDP contracted much more severely than expected in the second quarter,” the report said. Consumer prices in India are expected to grow at 4.9% this year and 3.7% in 2021. The current account balance is projected to grow by 0.3% this year and -0.9% (i.e., a contraction) next year.
• However, India is likely to bounce back with an impressive 8.8% per cent growth rate in 2021, says IMF
• The projection reflects a severe-than-anticipated contraction in economic activities in the first quarter as a result of the nationwide lockdown as well as the rapidly spreading pandemic.
• The Reserve bank of India (RBI) for the first time admitted that the economy will contract 9.5% in FY21, with a mild expansion in economic activity in the March quarter.
World Economy
• Global growth is projected to be -4.4% ( i.e., a contraction in output of 4.4%) for this year , the IMF said with the release of its World Economic Outlook October 2020 report titled, “A Long and Difficult Ascent”.
• For the world as a whole, the 2020 growth projection has been revised upwards by 0.8 percentage points relative to June– a result of a less dire second quarter and signs of a stronger recovery in the third quarter, partly offset by downgrades in certain developing countries and emerging economies.
• The world will not catch up fully to its pre-pandemic 2020-25 projected growth trajectory the report said, reversing progress made since the 1990s in reducing poverty and increasing inequality and causing a “severe setback” to projected improvements in living-standards across all groups of countries.
Important Takeaways
• IMF Headquarters: Washington, D.C., U.S
• IMF Managing Director: Kristalina Georgieva
• IMF Chief Economist: Gita Gopinath
• IMF Membership: 189 countries
• IMF Parent Organisation: United Nations