IMF predicts 'deeper recession' and 'slower recovery' from coronavirus pandemic

The International Monetary fund (IMF) has projected a 4.5 per cent contraction for the financial year 2021, which is much lower than what was estimated earlier. Citing longer lockdowns and economy shutdowns, IMF has asserted that the financial year would be marked by greater recession and longer recovery.

"It estimates growth this year at -4.9 per cent, or nearly two percentage points below projections in April, indicating that the recession will be deeper and recovery slower," IMF said. 

Uncertain forecast

In its recent June update- A Crisis Like No Other– the organisation projected an uncertain recovery forecast of 4.9 per cent global growth in 2020,1.9 per cent points below April 2020. The COVID-19 has had a more negative impact on activity in the first half of 2020 than anticipated and recovery is expected to be more gradual than the previous forecast, the IMF said. However, it added that there were significant downside risks and degree of uncertainty around its forecast. As for India, the global organisation had forecasted a growth of 1.9 per cent and a contraction of 4.5 per cent.  

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“India’s economy is projected to contract by 4.5% following a long period of lockdown and slower recovery than anticipated in April,” the fund said.

The latest assessment has also toned down the bounce back in Financial Year 2020 to six per cent against a stronger 7.4 per cent growth forecast in April. In 2021, global growth is projected at 5.4per cent marginally lower than 5.8 per cent it expected in April. 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.

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(With inputs from AP) (Image credits: AP)