The International Monetary Fund (IMF) has forecast that the Indian economy will contract by 4.5 per cent in 2020, which will be a historic low for the country.
In 2019, India’s growth rate was 4.2 per cent.
“India’s economy is projected to contract by 4.5 per cent following a longer period of lockdown and slower recovery than anticipated in April,” the IMF said in an update to the World Economic Outlook it had released two months ago.
“We are projecting a sharp contraction in 2020 — of 4.5 per cent,” IMF’s Chief Economist Gita Gopinath said. “Given the unprecedented nature of this crisis, as is the case for almost all countries, this projected contraction is a historic low.”
On the brighter side, the IMF added that India is expected to bounce back in 2021 with a 6 per cent growth rate.
In April, the IMF had projected a GDP growth rate of 1.9 per cent for India in 2020. So, the latest projection is -6.4 per cent less than its previous forecast.
Globally, the IMF has projected growth at 4.9 per cent in 2020, significantly worse than its April report. If that indeed happens, it will be the worst annual contraction since just after World War II, according to IMF.
The IMF has predicted that the USA’s GDP will drop 8 per cent this year, even more than its April estimate of a 5.9 per cent fall. China’s growth in 2020 has been projected at 1 per cent.
Gopinath said that the coronavirus pandemic-induced global crisis is like none other, but recovery will also be like none other.
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