The International Monetary Fund said on Wednesday that India’s Gross Domestic Product will contract by 4.5% in the 2020-’21 financial year, thanks to the lockdown imposed to fight the coronavirus pandemic, PTI reported. This is much lower than the 1.9% positive growth the IMF had forecast in its World Economic Outlook for April.
“We are projecting a sharp contraction in 2020 of 4.5%,” IMF Chief Economist Gita Gopinath told PTI while releasing the World Economic Outlook Update in Washington DC. “Given the unprecedented nature of this crisis, as is the case for almost all countries, this projected contraction is a historic low.”
India had imposed a nationwide lockdown on March 25. The lockdown was slowly eased, and by June 1, most non-essential services had been allowed to operate in non-containment zones in the country, subject to policies made by states.
The report said that the Indian economy will bounce back in 2021-’22 with a growth rate of around 6%. But this is 1.4% lower than the projection the World Economic Outlook made in April.
The IMF also said that the world economy will experience an even deeper recession in 2020-’21. It will contract by 4.9% in 2020-’21, 1.9% more than the 3% predicted in April. However, in 2021-’22, the global economy will have a “partial recovery”, growing at 5.4%, Gopinath said. She added that over the next two years, the loss of output for the world economy would amount to $12.5 trillion (Rs 945 lakh crore).
The United States economy will contract by a whopping 8%, the IMF said. This is 2.1% more than the 5.9% it had predicted in April. The IMF added that the pandemic has disproportionately affected low-income households, and will be a setback to the global efforts to reduce poverty.
The novel coronavirus has so far infected over 92 lakh people globally, and killed more than 4.78 lakh, according to the Johns Hopkins University. However, over 46 lakh of those infected have recovered.