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India’s GDP to Contract by 10.2% in FY20-21: OECD

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OECD-expects-the-Indian-economy-to-contract-by-10As per the report ‘OECD( Organisation for Economic Co-operation and Development) Interim Economic Assessment Coronavirus: Living with uncertainty’, September 2020 India’s Gross Domestic Product (GDP) for FY20-21 is projected to contract by 10.2%(-10.2%). The report also projected a sharp bounce back to 10.7% growth in the next fiscal year for India with similar high figures for other countries in 2021.

  • China is the only G20 economy with positive growth. The report estimated China’s GDP to 1.8% against -2.6% in June. This was due to an earlier outbreak, rapid control of the COVID-19 and strong policy support.

Highlights of the report

Global GDP

Global GDP is projected to contract by 4.5%(-4.5) in current fiscal against -6% earlier(June estimate) based on the improvements in China and the US, citing the prolonged spread of the virus for the downgrade in India’s growth.

Loss in Income

By the end of 2021 the world is expected to go back to the income level of 2019. It conveys that the world will have an income loss of USD 7 trillion. This is the  combined annual GDP of France and Germany

Note: US economy’s GDP is projected at -3.8% in the current fiscal against -7.3% in earlier estimates.

Recommendation

The report recommends the governments to maintain fiscal support and not to take any fiscal tightening measures prematurely. As this is the reason for a reversal in recovery during the financial crisis of 2008.

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In accordance with the Dun and Bradstreet’s (D&B) Country Risk and Global Outlook Report, which has covered 132 countries, the global economy is likely to contract by 5.2% in 2020. This is the biggest decline since the Second World War and a far stronger contraction than the 1.7% recorded in 2009 during the global financial crisis. As per report, the global economy will not reach pre-pandemic levels of activity again before 2022.

About Organisation for Economic Co-operation and Development(OECD):
Headquarters– Paris, France
Secretary-General– Angel Gurría(Full name-  José Ángel Gurría Treviño)
Member countries– 37 (not India)