According to the Global Economic Prospects (GEP-January 2021) report released by the World Bank (WB), India is expected to grow at 5.4% in the Financial Year (FY) 2021-22 & 5.2% in FY 2022-23 after an expected contraction of 9.6% in FY 2020/21. The report also highlighted that the
Global Economy is expected to expand by 4% in 2021.
i.The major causes of India’s contraction are sharp declines in household spending & private investment.
ii.The report also states that Vaccine Deployment & Investments as the need to sustain the Global recovery.
iii.The Global economy is set to have contracted by 4.3 % in 2020
iv.GEP is WB’s semi-annual report which reflects the state of the World Economy.
Growth Forecasts:
i.The Global growth forecasts are more than 5% below pre-pandemic projections.
ii.The report has also projected the growth rate of Gross Domestic Product (GDP) of different countries in 2021 – America will expand 3.5%, Europe at 3.6%, Japan to grow at 2.5%.
iii.The South Asian region is expected to grow by 3.3% in 2021.
iv.The Emerging market & Developing Economies (EMDEs) are expected to grow at an average of 4.6% in 2021-22.
v.The report also stated that the economic disruptions are an opportunity for countries to pursue a “greener, smarter, more equitable” development path.
Contractions:
i.The pandemic has caused per capita incomes to fall in more 90% of EMDEs pushing millions into poverty.
ii.The region of South Asia has contracted by an estimated 6.7% in 2020. The contraction is the effect of pandemic & nationwide lockdowns in Bangladesh & India.
Rise in Global Debt Levels:
i.The pandemic has caused a massive increase in Global debt levels in the EMDE economies.
ii.The debts are expected to increase by 9% points of GDP in 2020.
Regarding India:
i.In India the informal sector which accounts for four-fifths of employment has faced severed income losses during pandemic.
ii.India’s debt is expected to rise by 17% points of GDP owing to severe output contraction of more than 9%.
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Recent Related News:
i.June 9, 2020, World Bank in the Global Economic Prospect (GEP) June 2020 analytical chapters reports states that India’s growth is contracted by 3.2%(so growth is -3.2%) for FY20-21.
ii.October 8, 2020, As per World Bank’s latest South Asia Economic Focus forecasts, India’s Gross Domestic Product(GDP) is expected to contract by 9.6%(-9.6%) in FY21.
