Indian Economy To Shrink By 10.3% In 2020, To Bounce Back With 8.8% Growth In 2021: IMF

IMF said that despite taking a severe hit in 2021, India will regain the position of the fastest growing emerging economy, surpassing China's projected growth rate of 8.2 per cent.

(File Photo/AFP)

The International Monetary Fund (IMF) on Tuesday said that the Indian economy, which is currently reeling under the Coronavirus pandemic, is projected to contract by a massive 10.3 per cent this year. However, it added that India is likely to bounce back with an impressive 8.8 per cent growth rate in 2021. While releasing its World Economic Outlook October 2020 report titled, “A Long and Difficult Ascent”, the IMF said that despite taking a severe hit in 2021, India will regain the position of the fastest growing emerging economy, surpassing China's projected growth rate of 8.2 per cent. Released ahead of the annual meetings of the IMF and the World Bank, the report said global growth would contract by 4.4 per cent this year and bounce back to 5.2 per cent in 2021.

JUST RELEASED: October 2020 World Economic Outlook. Global growth is projected at −4.4% in 2020 – an upward revision of 0.8% compared to our June update – and 5.2% in 2021, a little lower than in June. Read the latest #WEO. https://t.co/XMCO1emJHw pic.twitter.com/SlRuQMG0rr

— IMF (@IMFNews) October 13, 2020

The global finance watchdog also stated that America's economy is projected to contract by 5.8 per cent in 2020 and grow by 3.9 per cent the next year. It expects that China is the only country, among the major economies, to show a positive growth rate of 1.9 per cent in 2020. The IMF in its report said that revisions to the forecast are particularly large for India, where Gross Domestic Product (GDP) contracted much more severely than expected in the second quarter. India's growth rate in 2019 was 4.2 per cent. "India is among those likely to suffer the greatest damage from global warming, reflecting its initially high temperatures. For India, the net gains from climate change mitigation-relative to inaction-would be up to 60-80 per cent of GDP by 2100," IMF said in its report. Last week, the World bank said India's GDP this fiscal is expected to contract by 9.6 per cent. World Bank has said that India's Gross Domestic Product (GDP) is expected to further contract by 9.6 per cent this fiscal, which is much steeper that the 3.2 per cent shrinkage projected earlier. The Washington-based global lender also said that country’s economic situation is “much worse” than ever seen before. There was a 25 per cent decline in GDP in the second quarter of the year, which is the first quarter of the current fiscal year in India. "Owing to the nationwide lockdown, Indian economy contracted a record 23.9% in the June quarter. Faced with an unprecedented downturn, India needs to continue with critical reforms to reverse the sudden and steep impacts of Covid-19 pandemic on its economy," World Bank had said. The country's growth is projected to rebound to 5.4 per cent in FY22, mostly reflecting base effects, assuming Covid-related restrictions are completely lifted by 2022. Weak activity, domestically and abroad, is also likely to depress both Indian imports and exports.