IMF Projects India's GDP Growth At 1.9% In 2020

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The International Monetary Fund (IMF) recently projected a gross domestic product (GDP) growth of 1.9 per cent for India in 2020, as the global economy hits the worst recession since the Great Depression in the 1930s due to the COVID-19 pandemic. Several economies in the region, including Indonesia (0.5 per cent), were forecast to grow at modest rates.

"We project global growth in 2020 to fall to -3 per cent. This is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period," IMF chief economist Gita Gopinath said, adding that the COVID-19 pandemic will severely impact growth across all regions.

IMF, in its latest edition of the World Economy report, has placed India as the fastest-growing emerging economies of the world. It is among the only two major countries, which will register a positive growth rate in 2020, the other being China, for which the IMF has projected a growth rate of 1.2 per cent.

Most countries, in the advanced economy group, are forecast to contract this year, including the United States (–5.9 per cent), Japan (–5.2 per cent), the United Kingdom (–6.5 per cent), Germany (–7.0 per cent), France (–7.2 per cent), Italy (–9.1 per cent), and Spain (–8.0 per cent), the IMF report said.

The IMF said that other regions are projected to experience severe slowdowns or outright contractions in economic activity, including Latin America (–5.2 per cent) — with Brazil's growth forecast at –5.3 per cent and Mexico's at –6.6 per cent; emerging and developing Europe (–5.2 per cent) with Russia's economy projected to contract by –5.5 per cent.

The Middle East and Central Asia (–2.8 per cent) with Saudi Arabia's growth forecast at –2.3 per cent, with non-oil GDP contracting by four per cent, and most economies, including Iran, expected to contract; and sub-Saharan Africa (–1.6 per cent) with growth in Nigeria and South Africa expected at –3.4 per cent and –5.8 per cent respectively. This is a crisis like no other, and there is substantial uncertainty about its impact on people's lives and livelihoods, Gopinath said.

In addition, many countries now face multiple crises—a health crisis, a financial crisis and a collapse in commodity prices, which interact in complex ways, she said.

Assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, Gopinath said the IMF projects global growth in 2021 to rebound to 5.8 per cent.

India's growth rate in 2021 is projected at 7.4 per cent, while that of China at 9.2 per cent. The United States has been projected to grow at 4.5 per cent and Japan 3 per cent, the IMF report said.