However, the IMF noted that India may grow at an impressive rate of 8.8 per cent in 2021 — surpassing China’s projected rate of 8.2 per cent — thereby regaining position as the fastest growing emerging economy.
In its latest ‘World Economic Outlook’ report, IMF noted that revisions to the growth forecast are particularly large for India, where gross domestic product (GDP) contracted much more severely than expected in the second quarter (Q2). India’s growth rate was 4.2 per cent in 2019.
“As a result, the economy is projected to contract by 10.3 per cent in 2020, before rebounding by 8.8 per cent in 2021,” IMF said.
Among the major economies, China is the only country to show a positive growth rate of 1.9 per cent in 2020. While, the United States is projected to contract by 4.3 per cent in the current fiscal and grow by 3.1 per cent in 2021.
Predicting a deep global recession this year, IMF said the world growth will collapse by 4.4 per cent — asserting that the global economic crisis is far from over mainly due to the impact of the coronavirus pandemic.
“This crisis is however far from over. In our latest World Economic Outlook, we continue to project a deep recession in 2020. Global growth is projected to be -4.4 per cent, an upward revision of 0.8 percentage points compared to our June update,” Gita Gopinath, the chief economist of the IMF, said.
Gopinath said that except for China, where output is expected to exceed 2019 levels this year, output in both advanced economies and emerging market and developing economies is projected to remain below 2019 levels even next year.
The IMF has upgraded its forecast for advanced economies for 2020 to -5.8 per cent, followed by a rebound in growth to 3.9 per cent in 2021.
According to the report, India is among those likely to suffer the greatest damage from global warming, reflecting its initially high temperatures. For India, the net gains from climate change mitigation-relative to inaction-would be up to 60-80 per cent of GDP by 2100.
IMF noted that the five largest countries/economic union — the United States, China, the European Union, Japan, and India — acting jointly can make a large dent in global emissions. While, the economic costs of mitigation vary across countries, all stand to gain greatly from avoided damages from climate change and co-benefits from mitigation, such as reduced pollution and mortality.
Gopinath said over time, as the recovery strengthens, policies should shift to facilitating the reallocation of workers from sectors likely to shrink on a long-term basis (travel) to growing sectors (e-commerce).
Emerging market and developing economies are having to manage this crisis with fewer resources, as many are constrained by elevated debt and higher borrowing costs, she added.
(With agency inputs)
Watch India’s economy to grow by 8.8% in 2021 after 10.3% contraction this year: IMF