World Economic Outlook 2021: Key details of the IMF's report

Why in News?

As per IMF, the Indian economy would stage a strong rebound in the Financial Year 2022. It would grow as much as 11.5% as informed by the IMF. 

Take a look at the World Economic Outlook Report released by the IMF this year. 

Key Details of the Report:

1. IMF revised its earlier forecast of an 8.8 per cent expansion in the Indian economy to 11.5% growth in FY22. 
2. Also, as per IMF 'India will emerge as the only key nation to record double-digit growth and reclaim the status of the world’s fastest-growing major economy'.
3. For the fiscal year 2022, it had predicted a record 10.3 per cent contraction in the Indian Economy
4. In Financial Year 2023, the economy of India would most likely grow at 6.8 per cent
5. As for other countries IMF stated that China would grow 8.1 per cent in 2021, followed by Spain (5.9 per cent) and France (5.5 per cent)
6. China was the only major country that registered a growth rate of 2.3 per cent in 2020. It is expected to expand at 5.6 per cent in 2022

Interesting facts in the Report

1. Transfers to firms, credit guarantees and funding-for-lending programs, have all together prevented bankruptcies that would have otherwise happened. 
2. The IMF analysed 13 advanced economies from 1990 to the COVID crisis and found that bankruptcies had actually fallen during this year’s recession. 
3. In fact, this decline can also reflect moratoria on bankruptcy filings implemented in some countries. 
4. As per IMF even though there is uncertainty, yet the global economy is projected to grow 5.5 per cent in 2021 and 4.2 per cent in 2022. 
5. The 2021 forecast is revised up by 0.3 percentage point from the previous forecast.
6. This reflects various expectations of strengthening of activity due to vaccine administration later in the year. It also suggests additional policies globally to support a few large economies.
7. The projected growth recovery in 2021 follows a severe collapse in 2020. These had great adverse impacts on women, youth, the poor, the informally employed, and those who work in contact-intensive sectors.
8. The global growth contraction for 2020 is estimated at -3.5 per cent, 0.9 percentage point higher than projected in the previous forecasts.
9. The IMF also states that the global community would be required to continue its work in coordination to ensure adequate access to international liquidity for the countries.
10. It also added that all eligible countries, where sovereign debt is unsustainable, must work with creditors and restructure their debt under the Common Framework agreed by the G20.
11. Take a look at the recovery projections for Advanced economies and emerging markets below.

IMF addresses economic inequality:

As per the IMF, 'Efforts can be complemented with investment in retraining and reskilling programs to improve reemployment prospects for displaced workers, strengthening social assistance as needed, and expanding social insurance (relaxing eligibility criteria for unemployment benefits, extending the coverage of paid family and sick leave). All of this would help address the uneven labour market impact of the crisis and curb rising inequality.'

As per the report, the pandemic is expected to reverse the progress made in poverty reduction across the past two decades.

About International Monetary Fund:

The International Monetary Fund was set up at a conference in Bretton Woods in the US along with the World Bank after World War II so as to assist the reconstruction of war-ravaged countries.

They are known as the Bretton Woods twins. It was created in 1945 and is accountable to the 189 countries that make up its near-global membership. India joined on December 27, 1945.

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