IMF projects steep 4.5% contraction of Indian economy as coronavirus, lockdown bites

The International Monetary Fund has projected that the Indian economy in 2020 will contract by a steep 4.5%, thanks to the coronavirus pandemic and the subsequent lockdown. The silver lining, however, is that it projects a growth rate to bounce back strongly by 6.0% in 2021.

“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 released in April.

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Worst global contraction since WW2

The IMF predicts that the global economy will shrink 4.9% this year, significantly worse than the 3% drop it had estimated in its previous report in April. It would be the worst annual contraction since immediately after World War II.

For the United States, the IMF predicts that the nation's gross domestic product — the value of all goods and services produced in the United States — will plummet 8% this year, even more than its April estimate of a 5.9% drop. This, too, would be the worst such annual decline since the U.S. economy demobilized in the aftermath of World War II.

The IMF issued its bleaker forecasts Wednesday in an update to the World Economic Outlook it released in April. The update is generally in line with other recent major forecasts. Earlier this month, for example, the World Bank projected that the global economy would shrink 5.2% this year.

The IMF noted that the pandemic was disproportionately hurting low-income households, “imperiling the significant progress made in reducing extreme poverty in the world since 1990.”

The global fund has also forecasted a nearly double-digit recession for Latin America and the Caribbean in 2020 – a contraction of 9.4 per cent – as the region is dragged down by its two largest economies, which continue to suffer from the coronavirus.

(With agency inputs) (AP Photo)

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