At the release of its World Economy Outlook October 2020 report, the International Monetary Fund (IMF) has made some positive predictions regarding the Indian economy in its ‘World Economic Outlook’ report. The IMF has projected a 10.3% contraction in the Indian economy for this year but it also predicted that the economy is likely to bounce back with an 8.8% growth next year. The growth rate of India in 2019 was 4.9 per cent.
If the Indian economy is able to achieve the growth rate as projected by the IMF, India will regain its position as the fastest growing economy in the world and it will also surpass China whose growth rate for the next year has been projected at 8.2 per cent by the IMF. However, as per the report, China is the only country among the major economies to show a growth rate of 1.9 per cent this year. The report said that the revisions to the forecast are particularly large for India where the Gross Domestic Product (GDP) experienced a much more severe contraction than expected in the second quarter.
The report has predicted the world growth rate to contract by 4.4 per cent this year while it is likely to be 5.2 per cent for 2021. It had projected a contraction of 5.8 percent in the US economy for this year and a growth rate of 3.9 per cent for the next year. Predicting the damage likely to be inflicted on countries due to global warming, the report said that India is among the countries that are likely to suffer the greatest damage from global warming. It added that for India, the total gains from climate change mitigation-relative to inaction-would be up to 60-80 per cent of the GDP by 2100.
The World Bank had predicted last week in the latest issue of its South Asia Economic Focus report that India’s GDP in expected to contract by 9.6 per cent this fiscal year which began in March. It also said that India’s economic situation is much worse that ever seen before. Noting the severe effects of lockdown on the Indian economy, the World Bank said that India needed to continue with critical reforms to reverse the sudden effects of the pandemic.