The International Monetary Fund (IMF) has projected the growth of Indian economy in 2020 at the rate of 1.9 per cent, while the world economy is likely to contract sharply by "minus 3 per cent" due to the coronavirus pandemic, which is proving worse than the 2008-09 financial crisis.
The IMF on Tuesday its yearly World Economic Outlook, providing a grim picture of the world economy amid global lockdown due to the coronavirus pandemic, which has jolted the world by claiming over one lakh lives globally.
The IMF has, however, given a bullish projection about India's economic growth in 2021, pegging the growth rate at 7.4 per cent.
Gita Gopinath, Chief Economist and Director of the research department at IMF said in her opening remarks, "The COVID-19 pandemic is inflicting high and rising human costs worldwide. Protecting lives and allowing health care systems to cope have required isolation, lockdowns, and widespread closures to slow the spread of the virus."
"The health crisis is, therefore, having a severe impact on economic activity. As a result of the pandemic, the global economy is projected to contract sharply by minus 3 per cent in 2020, much worse than during the 2008-09 financial crisis," said Gopinath.
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According to her, India will experience a growth of marginal 1.9 per cent. India in 2019 recorded a growth of 4.2 per cent. The outlook gives a more positive outlook for India's economy in 2021 with a projected growth of 7.4 per cent.
Gopinath said: "Advanced economies with strong governance capacity, well-equipped health care systems, and the privilege of issuing reserve currencies are relatively better placed to weather this crisis. But several emerging market and developing economies without similar assets and confronting simultaneous health, economic, and financial crises will need help from advanced economy bilateral creditors and international financial institutions."
As for China, the economy has been projected to grow at 1.2 per cent and projected growth of 9.2 per cent in 2021.
Emerging economies and developing economies would contract by one per cent, a sharp decline from the growth of 3.7 per cent in 2019. These economies are expected to grow at 6.6 per cent in 2021.
The Global Outlook also mentions that in a baseline scenario -- which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound -- the global economy is projected to grow by 5.8 per cent in 2021 as economic activity normalises, helped by policy support.
Developed economies such as the United States will face a sharp contract of 5.9 per cent. Europe as a bunch will face a projected contraction of 7.5 per cent.
Germany will face a sharp contraction of 7 per cent. Italy facing a contraction of 9.1 per cent and Spain with a projected contraction of 8 per cent. The developed economies as a bunch would contract by 6.1 per cent and have been projected to grow at 4.5 per cent if the pandemic is over by the second half of 2020.
The report says: "There is extreme uncertainty around the global growth forecast. The economic fallout depends on factors that interact in ways that are hard to predict, including the pathway of the pandemic, the intensity, and efficacy of containment efforts, the extent of supply disruptions, the repercussions of the dramatic tightening in global financial market conditions, shifts in spending patterns, behavioural changes (such as people avoiding shopping malls and public transportation), confidence effects, and volatile commodity prices.
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