Global Economy to shrink in 2020, India to grow at 1.9%: IMF

International Monetary Fund (IMF) on April 14 has mentioned that the world economy is expected to shrink by 3.0% in 2020. Due to the ongoing impact of the COVID-19 pandemic, it will be the steepest downturn since the Great Depression of 1930.

In its 2020 World Economic Outlook, IMF predicted the partial rebound in 2021 with the world economy growing at a rate of 5.8%. But it mentioned that the predictions are marked with uncertainty.

While projecting the economic growth of countries, the IMF has forecasted the Indian economy to grow by 1.9% in 2020-2021. Its estimate for India is in the line with forecasts made by other International agencies.

Key Highlights:

• In its April World Economic Outlook, IMF has projected global growth in 2020 to fall to -3%.

• The projection has been made under the assumption that the effect of the pandemic will be at its peak in the second quarter for most of the countries in the world.

• Lockdown has become the worst recession since The Great Depression.

• The projection made by IMF is a downgrade of 6.3 percentage points from January 2020, making it a major revision over a short period of time.

• For the first time since the Great Depression, advanced economies, emerging markets, and developing countries are in a recession.

• In this year growth in advanced economies is projected at -6.1%, emerging markets are with normal growth levels and advanced economies with a negative growth rate of -1.0% in 2020.

IMF’s Forecast for Indian Economy:

IMF put India as one of the fastest-growing economies amid the COVID-19. It is predicted though that the growth will be of slowest pace since the 1991 balance of payment crisis.

As per China, the Indian economy is too projected to grow at 7.4% in the next fiscal year as the impact of COVID-19 is contained.

IMF’s economic forecast for other countries:

• U.S. economy will contract 5.9% in 2020 with an expected rebound of 4.7% growth in 2021.

• Euro Zones' economies will contract by 7.5%.

• Italy will see its GDP fall to 9.1%.

• Fall of 8.0% in Spain.

• Germany will see the fall of 7.0%.

• The economic fall in France will be7.2%.

• Latin American economies will see a contraction of 5.2%.

As per the IMF, China will show positive growth of 1.2% in 2020. A reduction from 6% growth predicted in IMF’s January forecast. In 2021, China’s economy is expected to grow by 9.2%.