Indian Economy Set For ‘Historic Low’, Will Sharply Contract By 4.5% In 2020 , Predicts IMF

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In yet another gloomy news for the Indian economy, the IMF has projected a sharp contraction of 4.5 per cent for the Indian economy in 2020, a “historic low,” citing the unprecedented coronavirus pandemic that has nearly stalled all economic activities, but said the country is expected to bounce back in 2021 with a robust six per cent growth rate.

According to a report by a news agency , The International Monetary Fund (IMF) projected the global growth at 4.9 per cent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast.

“We are projecting a sharp contraction in 2020 of -4.5 per cent. Given the unprecedented nature of this crisis, as is the case for almost all countries, this projected contraction is a historic low, Indian-American Gita Gopinath, IMF’s Chief Economist, told PTI as she released the World Economic Outlook Update .

The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021, global growth is projected at 5.4 per cent, the report said.

For the first time, all regions are projected to experience negative growth in 2020. In China, where the recovery from the sharp contraction in the first quarter is underway, growth is projected at 1.0 per cent in 2020, supported in part by policy stimulus.

“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.

The IMF’s record reveals that this is the lowest ever for India since 1961. The IMF does not have the data beyond that year. However, India’s economy is expected to bounce back in 2021 with a robust six per cent growth, it said.

In 2019, India’s growth rate was 4.2 per cent.