The International Monetary Fund (IMF) steeply slashed India’s growth outlook for the current fiscal year to a minus 4.5 per cent from 1.9 expansion estimated in April owing to an extended Covid-19 lockdown and slower economic revival. This will be the lowest in several decades.

In fact, India faced the sharpest cut in the outlook, a 6.4 percentage point revision due a more severe fallout of the pandemic than earlier anticipated. In comparison, emerging markets and developing countries group saw a 2 percentage reduction in outlook while the world outlook was only cut by 1.9 percentage points.

“India’s economy is projected to contract by 4.5 per cent following a longer period of lockdown and slower recovery than anticipated in April,” the IMF said in its latest World Economic Outlook, titled ‘A Crises like No Other, An Uncertain Outlook’. India’s growth is expected to revive to 6 per cent in 2021-22, as per IMF.

With downturn deeper than previously projected, the global output will shrink by 4.9 per cent and emerging markets by 3 per cent this year.

“For the first time, all regions are projected to experience negative growth in 2020,” said the IMF.

Incidentally, China is estimated to post a 1 per cent growth in 2020, and revive to 8.2 per cent in 2021. (more…)

India’s real gross domestic product in Financial Year 2020-21 could contract 5.3 per cent, said India Ratings and Research on Wednesday as it flagged the “disorder” caused to the economy by Covid-19 and the nationwide lockdown to contain the disease.

“This will be the lowest GDP growth in Indian history and the sixth instance of economic contraction, others being in FY58, FY66, FY67, FY73 and FY80,” said the ratings agency in a press release. It expects nominal GDP to contract 3.4 per cent for the year and gross value added to contract by 5.5 per cent.

“The disorder caused by the Covid-19 pandemic unfolded with such a speed and scale that the disruption in production, breakdown of supply chains/trade channels and total wash out of activities in aviation, tourism, hotels and hospitality sectors will not allow the economic activity to return to normalcy throughout FY21,” the agency said.

“As a result, besides contracting for the whole year, GDP will contract in each quarter in FY21. However, the agency believes the GDP growth would bounce back in the range of 5 per cent-6 per cent in FY22, aided by the base effect and return of gradual normalcy in the domestic as well as global economy.” (more…)

The latest forecasts from the International Monetary Fund