Despite a decline of 9.6 per cent in 2020 due to the lockdowns imposed by the Union government to contain the spread of the COVID-19 pandemic, the Indian economy is expected to register a growth of 7.3% in 2021. This is according to a report titled World Economic Situation and Prospects 2021 released by the United Nations (UN).
The global economy shrank by 4.3% in 2020, which is two-and-a-half time more than the decline during the global financial crisis of 2009. It is likely to recover 4.7% in 2021.
Outlook for 2021
The report provides that economic growth in South Asia in 2021 will be insufficient, at 6.9 per cent, to make up for the losses of 2020, as pandemic hotspots re-emerge and, increasingly, the ability of governments to deal with the multitude of challenges gets exhausted.
“While trade, remittances and investment are expected to pick up in 2021, as much of the global economy moves towards recovery from the widespread lockdown, investment and domestic consumption in many South Asian countries will nevertheless remain subdued owing to the continuing threat of the pandemic and the scarring effects of the crisis.”
“Regional economic growth for 2022 is forecast at 5.3 per cent, which would allow South Asia to finally exceed its 2019 economic output, albeit only marginally. On the other hand, South Asian countries that are relatively more exposed to global economic conditions, such as Bangladesh and Maldives with their high share of foreign trade and Nepal with its dependence on tourism and remittances, will enjoy a stronger rebound, of about 10 per cent growth in 2021.”
“Other countries in the region will experience economic growth ranging from 3.1 per cent (Sri Lanka) to 7.3 per cent (India),” the report provides.
The report says, “The short-term economic costs of the Great Disruption do not fully account for its long-term impacts on employment, productivity and potential output. While large-scale fiscal stimulus prevented total economic collapse and supported the incomes of millions of households, there is little sign that these measures will boost long-term investments and create new jobs.”
“Unless investments in physical and human capital pick up, the world economy will likely adjust to a lower growth trajectory.”
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