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India’s GDP Growth to Contract by 8% in FY21: IMF

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GDP shrinking at sharper 8The International Monetary Fund (IMF) in its latest World Economic Outlook, titled ‘Policy Support and Vaccines Expected to Lift Activity’ has projected India’s Gross Domestic Product (GDP) to contract by 8%(-8%) in FY20-21. Earlier in its October’s forecast, this estimate was -10.3%.

  • It also projected India’s GDP growth at 11.5% in FY 21-22, which makes the country the only major economy of the world to register a double-digit growth 2021 amid the COVID-19.
  • While in FY 22-23 the India’s GDP will be at 6.8%.
  • The global economy is projected to grow by -3.5% in 2020.
  • On the global front, the economy is projected to grow by 5.5% in 2021 from earlier 5.2%. The projection remained at 4.2% for 2022.

Highlights of the Outlook

Price

i.The oil prices are expected to rise in 2021over 20% from the low base for 2020, however they will remain below their average for 2019.

ii.The Non-oil commodity prices will also increase with those of metals, in particular.

Growth in 2021

China will be next on the list after India, with 8.1% growth in 2021 followed by Spain (5.9 per cent) and France (5.5 per cent).

Point to Recall:

China is the only major country which had a positive growth rate of 2.3% in 2020.

Other Agencies GDP Estimates for India:

Fitch: -9.4%(2020-21); 11% (2021-22)

Organization for Economic Co-operation and Development (OECD): -9.9%(2020-21); 8%(2021-22)

CRISIL : -7.7%(2020-21); 10%(2021-22)

Recent Related News:

On December 15, 2020 Standard & Poors(S&P) Global Ratings has revised India’s real Gross Domestic Product (GDP) FY21 rate upwards to -7.7%(contract by 7%) from -9% projected earlier on rising demand and falling COVID infection rates. The growth of India will rebound to 10% in FY22.

About International Monetary Fund (IMF):

Managing Director and Chairman of the Executive Board – Kristalina Ivanova Georgieva Kinova from Bulgaria
Headquarters– Washington, DC, United States of America (USA)
Members– 190 countries