Indian economy to contract by 4.5 percent in 2020: IMF
The IMF projection of global growth is 1.9 percentage points below April 2020 World Economic Outlook forecast.
The International Monetary Fund (IMF) has predicted that India's economy will shrink by 4.5 percent in 2020 following a long period of nationwide lockdown and slower recovery than what was anticipated in April. The global growth has been projected at -4.9 percent in 2020.
The IMF projection of global growth is 1.9 percentage points below April 2020 World Economic Outlook (WEO) forecast. The IMF stated in its report that the Coronavirus pandemic has had a more negative impact on activity in the first half of 2020 than anticipated. The recovery hence, is projected to be more gradual than what was forecasted previously.
Economic rebound in 2021?
The IMF has predicted the global economy to rebound in 2021 with a 5.4 per cent growth rate. This means that the 2021 GDP will be around 6.5 percentage points lower than the PRE-covid GDP projections made in January 2020.
The IMF report stated that the adverse impact on low-income households is particularly acute and it threatens the significant progress made in reducing extreme poverty in the world since the 1990s.
What can be done to improve the situation?
The International Monetary Fund (IMF) has called all countries including those that seem to have passed their infection peak to ensure that their health care systems are adequately resourced. The international body stated that the international community must increase its efforts to support national initiatives such as providing financial assistance to countries that have limited health care capacity and demarcating funding for vaccine production to ensure that adequate and affordable doses of the vaccine are made available to all nations. Several nations have begun clinical trials of potential vaccines.
The IMF report also stated that where lockdowns are required, the economic policy should continue to cushion household income losses with sizable, well-targeted measures and provide support to the firms suffering from the consequences of restrictions on activity.
In places where the economies are reopening, IMF stated that targeted support should be gradually unwound as the recovery gets underway and policies should provide stimulus to increase demand and incentivize the reallocation of resources in sectors other than those likely to emerge persistently smaller after the pandemic.