The International Monetary Fund (IMF) in its latest World Economic Outlook forecast has predicted that the Indian economy is likely to grow at 11.5% in 2021 and 6.8% in 2022. The report has estimated a decline in the country’s GDP by 8% in 2020. Interestingly, India’s projected growth rate is the highest in the world surpassing that of China and the US.
While China is expected to grow at 8.1% in 2021, its growth rate is supposed to decline to 5.6% in 2022. However, China remains the only major economy in the world that has recorded a positive growth rate in 2020 amid the coronavirus pandemic due to a resilient export sector and strong financial measures.
As compared to India and China, the US is expected to grow at 5.1%, with IMF’s chief economist Gita Gopinath suggesting that the proposed financial package by US President Joe Biden will contribute over 1% in the country’s projected GDP growth in 2021.
Global economy to grow at 5.5%
As far as the global GDP is concerned, it is expected to grow at 5.5%, according to the latest report. Notably, IMF had in October last year predicted that the global economy will grow at 5.2% in 2021. However, it has revised the growth outlook owning to the more-than-expected growth in the second half of 2020.
The revision is also done due to a positive outlook as several countries have started immunising people against COVID-19 and additional financial support announced by countries such as the US and Japan.
Uncertainty over predictions
As per an IMF blog post written by Gita Gopinath, “There is a great deal of uncertainty around this forecast. Greater success with vaccinations and therapeutics and additional policy support could improve outcomes, while slow vaccine rollout, virus mutations, and premature withdrawal of policy support can worsen outcomes.”
“If downside risks were to materialise, a tightening of financial conditions could amplify the downturn at a time when public and corporate debt are at record highs worldwide.”
As compared to the pre-pandemic level, the report provides that the projected cumulative output loss over 2020-2025 remains significant at $22 trillion, which is roughly the size of the US economy. Close to 90 million individuals are expected to enter extreme poverty over 2020–21, reversing the trends of the past two decades.
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